Another great way to earn extra money is to put your money in a Certificate of Deposit (CD). What if you aren’t careful, though? When a CD matures, you might lose money or miss out on better chances.
You should not make a few mistakes that will cost you a lot if you want to cash out a CD soon, especially in April 2025.
Let’s say it in simple terms that even a kid in school can understand!
First, What Is a CD?
A Certificate of Deposit (CD) is like a separate bank account for savings. You promise to keep the money in the bank for a certain amount of time, like 5 years, 6 months, or 1 year.
You get more interest from the bank than with a regular savings account in exchange. On the due date, which is the end of the term, you can get your money back plus the interest you made.
1. Don’t Let Your Bank Auto-Renew Your CD
When the maturity date of your CD comes up, you generally have 7 to 10 days to decide what to do next. The bank might renew your CD for another term if you don’t tell them what you want to do.
And guess what?
- The new CD might have a lower interest rate.
- You might not be able to touch your money again for a long time.
Some banks don’t even remind you that your CD is maturing.
What You Should Do Instead:
- Set a reminder on your phone or calendar for your CD’s maturity date and the grace period.
- Log into your account as soon as it matures. Choose the option to withdraw or close the CD if you don’t want to renew it.
- Compare your options: Sometimes it’s better to move your money to a different place.
Tip
If you’re not ready to lock your money again, consider a High-Yield Savings Account (HYSA). For example, the Barclays Tiered Savings account offers a 4.30% APY without locking your money.
2. Don’t Let Your Money Sit Idle
When you cash out your CD, you might think, “I’ll figure out what to do with the money later.”
That being said, “later” often turns into months, and money in a checking account doesn’t make much or any interest!
Imagine missing out on hundreds of dollars because you didn’t act fast enough.
These days, even small amounts of time can make a big difference.
What You Should Do Instead
- Move the money directly into a high-yield savings account during your grace period.
- Plan ahead: Know where you want to put your money even before the CD matures.
- Avoid checks: Don’t request a paper check and let it sit around. The faster you move your money to an interest-earning account, the better.
Fun Fact:
In many internet banks, you can open a HYSA account with a high APY and no minimum balance. It’s simple to start one of these accounts, and the rates are often better than those at regular banks.
3. Don’t Reinvest Without Shopping Around
Interest rates were likely a lot lower when you first opened your CD. Your old CD may have given you 1% or 2% back. But now, in April 2025, many banks are giving more than 4% on CDs.
Here’s How Big the Difference Can Be:
| APY | Interest Earned in 1 Year (on $20,000) |
|---|---|
| 1.50% | $300 |
| 4.00% | $800 |
That’s a $500 difference in just one year. Imagine what you could do with an extra $500—buy new school supplies, take a mini-vacation, or boost your emergency fund.
What You Should Do Instead
- Shop around different banks and credit unions before you reinvest.
- Look at online banks, too. They often offer better rates than traditional banks because they have lower overhead costs.
- Compare CD terms: Sometimes a 12-month CD offers almost the same rate as a 5-year one. Shorter terms give you more flexibility.
Extra Tip:
Use websites like Bankrate, NerdWallet, or DepositAccounts to compare the best CD and savings account rates.
Bonus Tips to Make the Most of Your Money
🔵 Think about your goals:
If you need the money quickly for something like school fees, a trip, or an emergency, it’s better to keep it in a high-yield savings account than in a long-term CD.
🔵 Consider CD ladders:
You spread your money out over several CDs with different due dates. This is called a CD ladder. As long as you keep the rates high, you can get some of your money out of it regularly.
🔵 Watch inflation:
Even in a CD, your money could lose value if inflation is high. To stay ahead, look for accounts with rates that are as low as possible.