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What To Do When Your CD Matures

We put our emergency fund into a CD ladder [3] and every month one of those certificates of deposit matures and is automatically renewed. As an added bonus, ING Direct, where our CDs live, gives us a CD rollover bonus [4] whenever we renew (currently the bonus is 0.15% on CDs of at least 12-months long). For us, the decision is simple. It’s a CD ladder and you simply renew the CD each month for the 12 month term.

What if you’re money isn’t in a CD because it’s part of a CD ladder, what should you do?

My goal is always to maximize the interest rate while minimizing my headache. Our CD ladder isn’t at ING Direct because they offered the best 12 month CD rates [5] (though they currently do, especially after you factor in the rollover bonus or the new money bonus [6]), it’s because it was the simplest online savings account available when we set up the ladder.

1. Decide whether you want to save this money in a CD. If you intend to buy a house or a car and need the cash for a downpayment, don’t put it back into a CD. If you really want to put it back into a CD, consider a no-penalty CD [7] where you can withdraw your money at anytime.

If you still want to save it, you have two options:

2. Review interest rates to see if your current bank is offering competitive rates. If your bank still offers the best rates, then then simplest way is the best way – renew it at your current bank. If your bank doesn’t offer the best rate, you have to decide whether opening a new account and transferring the money, which will take several days, is worth the different in interest.

You can use this CD interest calculator [8] to help you decide. 0.5% APY difference on a 12 month CD is only $5 on $1,000 in savings. That’s $5 before you take away part of it for taxes.

Those are the steps I take whenever I’m deciding what to do with one of my non-laddered emergency fund CDs mature.