Can You Automatically Roll Over a CD When the Term Expires?

You may be able to automatically roll over a certificate of deposit (CD) when the term expires, but that may not always be the best choice.

When the end of your certificate of deposit term approaches, your CD provider will contact you with options. The money in your CD may automatically roll over into a new CD, or you may have to select that option before the end of the term. You can also withdraw the money, along with the interest you earned, when your CD reaches maturity.

Before your CD matures, learn the rules that apply and check the interest rate on the new CD because it could be lower than the previous rate. It's often better to shop around for the best CD rates as your CD matures than to allow automatic rollovers.

How to Roll Over a CD

For most CDs, you don’t need to do anything to have the money roll over into a new CD of a similar length—most CDs held with most banks and building societies will automatically roll over if you do nothing. 

Each bank, credit union, and other CD provider has its own rules when it comes to CD maturities. When your CD is close to maturing, your provider should contact you and explain your options. Typically, they will offer you three options:

• Roll over the CD into a new CD at that bank: Generally, this would be into a CD that most closely matches the term of your maturing CD. For example, if you have a one-year CD concluding, the provider would likely roll your balance into a new one-year CD.
• Withdraw the proceeds: They can be transferred to an external bank account or mailed to you via paper check. 
• Transfer the funds into another account at that bank: Options include savings, checking, and money market accounts.
  

For most CDs, the first option is the default: If you do nothing, your CD will roll over into a new one that matches the existing term. You should check with your provider to learn its rules, however, because each provider sets its own.

Finding the Best CD Rates

Generally, when a CD expires it will automatically roll over unless you take prior action. When a CD rolls over, however, the new interest rate might be different than the rate you were receiving. The new CD will have the same or a similar term, e.g. a 12-month CD will be rolled over into a new 12-month CD. The interest rate, however, could be different depending on the current interest rate environment or presence (or lack) of promotional offers.

CD interest rates depend on a host of factors and generally follow the prime rate, which is influenced by the fed funds rate. If a nation's central bank is trying to slow down the economy, interest rates may be higher, which makes CDs more attractive. Conversely, if they're trying to stimulate the economy, interest rates may be low, making CDs less attractive.

You may purchase a CD in a high interest rate environment but when it matures, you could be in a low interest rate environment. If you roll the money over, you'd earn significantly less on your new CD than your prior one.

If want to continue investing in CDs, take the time to evaluate the rates offered by different providers before your CD reaches maturity. And if you haven't found a provider you like, instruct your bank to move your CD funds into a high-yield savings account upon maturity. That way, you'll have the option and time to find the right CD rather than being locked up in one that no longer serves your investment purposes.

Consider a variety of CDs and term lengths. We rank the top 15 APYs in every major CD term and category to help you find a CD that meets your needs, including:

• Best 3-Month CD Rates
• Best 6-Month CD Rates
• Best 1-Year CD Rates
• Best Jumbo CD Rates
  

Frequently Asked Questions (FAQs)

The Bottom Line

When a CD reaches maturity, your bank or credit union should outline your options. Typically, you will be given a short window in which to withdraw your funds. If you do nothing, your CD will likely roll over into a new CD. 

The term length of your new CD will usually be similar to your previous one, but the interest rate may be different. Your bank or credit union will pay you the same interest rate as new CD customers and this rate might be lower or higher than your previous rate. If you want to earn as much as possible on CD investments, you should shop around for the best CD rates each time your CDs mature.