A CD, or certificate of deposit, is a type of savings account that lets you earn a set interest rate for a specific period or “term.” CD interest rates are usually higher than a typical savings account, but there may be penalties if you withdraw the money before the CD matures (reaches the end of the agreed-upon term).
Understanding CD grace periods
Most CDs have grace periods, which is the time you have to make changes to your CD after it matures. A grace period typically lasts 7 to 10 days after a CD matures (Citi CDs have a grace period of 7 calendar days). You can make changes during this time, such as withdrawing your money or changing the term, without incurring penalties.
Options after a CD matures
When your term ends and the grace period begins, you have options for what to do next. You can renew your CD, move the money to a different CD, withdraw your funds or invest your money in a different way. Let’s take a closer look at each option.
Renew your CD
In many cases, the bank will automatically renew the CD for the same term at the rates in effect on the CD renewal date. If you do not need the money immediately and are happy with the interest rate and term, you might let the CD renew. Always confirm the rate and term before going forward with this option. CDs may renew with different rates, terms or conditions. Your bank may automatically renew the CD for a different type. For example, a no penalty CD might renew for a fixed rate CD.
Move the money to a different CD
You may want to shop around for a new CD that better suits your needs. Different CDs may have higher interest rates, or offer rates that gradually increase, like a step up CD. Others, such as no penalty CDs, allow you to invest your money without worrying about penalties for early withdrawals, however usually you have to withdraw the entire balance and after the first few days of funding has passed. Depending on your financial needs, you may also consider a longer or shorter term.
Withdraw your funds
If you need the money right away, you can also withdraw the funds before the grace period ends. Many people use CDs to save for a short- or medium-term purchase, like a car or a down payment on a house. Whatever the case, you have the option to withdraw your funds without penalty during the grace period.
Invest your money in a different way
If you’re ready to move your money out of a CD but don’t need to spend it right away, you can move it to a different type of investment. You might consider investing in stocks, bonds or exchange-traded funds (ETFs), or simply moving the money to a high-yield savings account (HYSA).
Disclosure: This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to completely describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.
