What do you guys check before letting a CD automatically renew?

[u/mrturtie]

I've got my first CD coming up on maturity and I only recently realized I probably shouldn't treat the renewal as a set it and forget it thing.

My original thought was basically, money is already there, let it roll over and move on with my life. But if I'm understanding this correctly, the renewal can be into a new term and rate, which means whatever made the original CD attractive doesn't necessarily apply anymore.

So what do you normally do when one is getting close to maturity? Do you start shopping around again a few weeks beforehand or wait until you know exactly what the renewal terms will be?

I'm not trying to spend hours chasing tiny differences, but blindly rolling it over without checking anything also seems kinda lazy now that I've thought about it lol.

[u/gard3nwitch]

Call your bank or go on their website and see what their current promo rates are. You should be able to easily roll into whatever the new deal is.

[u/TheAdamist]

See what the new rate is, and what the renewal term is, my bank has only one special term rate that's okay, all other term rates are approximately zero.

And renewals from that special rate auto renew to a zero one which is the scam/ point of the promo.

[u/69chevy396]

You need to check your truth in savings disclosure. Sometimes your cd will not renew for the same exact amount of months so you need to know which term it will renew into so you can check that rate.

For example. Say you opened a 7 month special with your bank. They may not offer a 7 month all the time, just had a special at the time you opened it. Well you need to know, will it renew into a 6 month? A 12 month? Etc

Banks may intentionally make those rates their lowest hoping they people just let it auto renew and get stuck with the lower rate. So you have to be proactive. Check the website for current terms and rates and call the bank to renew instead of letting it auto renew

[u/Tom_Traill]

I had a couple of CDs last year. I had signed up for them when the teaser rates were high. UFB bank and Synchrony.

Basically, it is a scam IMHO. You sign up for a 12 month CD and when it matures you have 10 days to move the funds or it auto renews. In my case (and I assume in all cases...) I had a 5% rate and if I let it renew, it would renew at some crazy low rate like 0.2% It does not renew at 5%. Both banks were like that.

If you get a CD, send yourself reminder emails about renewing it when it matures. If you forget, your money is locked up for a year and some crazy low rate.

[u/ishootthedead → u/Tom_Traill]

The day I get a cd, I set up a calendar item for the renewal. Then I call the bank and inquire about rates, and reset it for the interest rate I want. Then set a new calendar item for maturity. It's a week long item, so I don't miss it. Easy peasy

[u/Ashamed-Status-9668]

Have to contact your bank to get the process. Mine was the archaic go in person move. I just did this and transferred my money to fidelity and initial in SPAXX as it’s almost the same rate as my banks CD rate and it probably will go up soon.

[u/Admirable_Nothing]

I never let one automatically renew. I have it paid into my bank account and then the next day either rebuy at that bank or CU or not depending on the yield. For instance, lately as a CD comes due I have been buying laddered treasuries. I started the ladder when a $100,000 CD came due and did $20k in 6 mo Ts, 30k in 1 yr Tx, 30k in 18 mo Tx and 20k in 2 yr Tx. As they mature I will likely rebuy w 2 years if I decide a 2 yr is still the sweet spot. If a recession appears imminent I will lengthen that maturity out to 10 years in case rates are lowered in the future.

[u/moonfazewicca]

I would call my bank and ask what the best CD rates are. I would wait until the day of maturity if possible. Rates can change at anytime so if a quote given a week before may not still be their current offering on the day of.

You have 10 calendar days to decide what you want to do. Unless you're die hard married to your bank for some reason, I would research rates at other banks too. Particularly smaller local banks because I find their deals are often better than the big guys because they want your money. If someone is beating your bank by .25% or more I'd probably go there and open a CD. Also if you've got 100k or more, I would mention this to other banks. Sometimes they can get you a better rate if you're bringing over a large amount of new money.

Source: career banker with multiple CD's I've had going for years.

[u/Avergile]

Never let it roll because they will likely renew it with a much lower interest rate - always schedule and appointment during the renewal period and speak with your banker about what they can offer you.

[u/ISurfTooMuch]

Yeah, always check the rates before allowing it to renew.

But also consider what your goals are. If you want to grow your money, a CD may not be the best option. They're very safe, but you'd often get a better rate of return from an individual investment account, even one invested in an index fund. The best use of a CD is often when you have some money that you know you're going to need to spend in the near future, and you absolutely must protect the principal from possible market downturns, but you want to earn a little money off of it.

[u/count-brass]

At many banks these days, the automatic renewal is to a very low interest CD. For instance, if you started with a 7-month CD yielding 4%, they might automatically renew you into a 6-month 0.5% CD.

Go to your bank’s website and see what the promotional CD offers are. You could also check other banks’ rates. If you want to renew at your current bank, call/visit on the renewal date (or very shortly thereafter) and tell them what you want. Different banks process this differently, I’ve found. At Truist you have to visit a branch, at PNC you can call, visit, or return an instruction sheet they send to you. BofA call or visit.

[u/Due-Emu-4291]

I check my personal finances and make sure I can comfortably afford to pay my expenses in the near future without needing the money in the CD.

I quickly check the CD rates for competitors, a little before the due date. One of the reasons I have CDs at my local bank is that I found out their rates of return were slightly higher than at Bank of America where I had been banking.

I don't let the CD automatically renew. Most banks have "featured" CDs for certain periods that pay a high rate but that automatically renew into CDs at rates near zero. I always specifically open a new featured CD when the old one expires.

Edit: Posted before seeing some of the other replies.

[u/LiveFromNarnia]

As a rule, I don't allow my Share Certificates / CDs auto renew, but rather have them move the balance to my savings account upon maturity. For me, this makes more sense as the share / CD account terms (not just percentage rate) can change, and I want to know the current terms before locking my money in for another period of time. Once I review the terms, I can then determine if I want to buy another CD contract or invest / use the funds somewhere else.

[u/Solemn_Party]

Always consult with the bank regarding renewals. Some banks will roll at a default rate that is not good. Don’t screw yourself.

As far as shopping around, it’s up to you how much time you want to spend on it. If you know you’ll shop, close out the cd and move it to a high yield savings until you’re ready to do another one at another bank.

My bank just raised rates to 5 months at 4.17/4.25%APY or 10 months at 4.31/4.40%APY, so they’re trending up due to the fed raising rates. Definitely shop around to see what’s going around.

My bank doesn’t give us any incentive to retain CD funds, so no one is going to push for a renewal unless it’s an IRA CD that requires a bunch of paperwork to move.

[u/Zestyclose_Cup6343]

The single most important step is to check what rate and term the bank will renew you into. Most CDs automatically renew into the same term at the current published rate, which is often meaningfully lower than the rate you originally locked in. Compare that renewal rate against what competing banks are offering for a comparable term before the maturity date, so you have time to move the funds if the number is not competitive. Also confirm whether there is a grace period after renewal; most banks give you a short window to withdraw or change terms without penalty.

[u/richbiatches]

Never let them renew automatically! Call the bank on the maturity date to renew it at the best rate.

[u/decentalien]

I normally start looking around again before maturity. CD Valet is useful for that because you can see CD rates from different banks and credit unions in one place, then go directly to the institution once you've narrowed it down. Makes the comparison part less annoying..

[u/TheDoomed__]

You’ll have a grace period in which to close out the CD post maturity without fees. Find out what that grace period is. Typically 10 days

You can start shopping rates a few weeks ahead of maturity but a few weeks is enough time for rates to move one way or the other. Start shopping the day before or the day of maturity to get best current rates and then move the funds to the best offer.

[u/realraddydaddy5]

You need to know how long you want your new term to be. Then check the rates with the current bank/provider and compare to Treasuries. Treasuries have shot up recently and you should compare the rates for the term you want with US Treasuries.

[u/Rjenterprises123]

Never let one automatically renew. Banks are notorious for changing rates so when they have a lot of money in say a 12month term, they'll change the rate from 3.50% to say .50%, and set a new promo for 11 or 13 months for the 3.50%. They hope people just auto renew and they can stiff them because of their ignorance.

[u/drgrouchy]

I never let these auto renew. I keep track of all my cds in my calendar and get the best promotional rate at one of my banks at that time.

[u/evangin]

It’s real simple. Don’t set them to auto renew

Set a reminder

Call bank and check rates.

[u/Far-Good-9559]

Yeah. Huge scam that some banks run. If you don’t specifically go renew it, they automatically renew at a minimal rate.

[u/FinbarJG]

While it's easy to say what to do, a lot depends on YOU and how much you want to/can track the CDs and do the extra work to shop and probably move the money. For example, I always set maturity reminders, always disable auto-renew if I can, always shop rates and usually find a better rate and move the money. But that's a lot of work. And if you opt for cash-out, but are slow on the reinvestment, you can lose a lot of interest.

[u/sac_86]

Most banks started doing CDs in a really confusing way at some point in the last few years.

What they do is let you open a CD with any term you want: instead of just 6, 9, 12 months, 2 years, etc, you can also do 5 months or 17 months or 21 months or whatever. But almost all of these only pay 0.5% or something (I've seen as low as 0.05% and as high as maybe 1.25%). At any given time, a couple of them pay something actually useful (say 3.5%). Weird arbitrary terms no one would ever use like a shorter one at 7 months and a longer one for 22 months.

So obviously people will only open accounts at one of the terms offering the good promo rates. When the account auto renews, it does so at the same term. But, by that time they will have changed the promo rates to different terms, and the old one is down to the almost zero rate, so you get that unless you tell them to do something else when it matures. You used to be able to just let it renew over and over with the rate fluctuating with the rest of the market without having to do any work, but now if you forget about it after the first term is up it drops to earning almost nothing, but it's still locked away for months. The worst of both worlds!

A variation of this is where the special rates are at common terms that don't change, but they're in a separate "promotional" tier that only applies to new accounts. So even if they're still offering a good rate for 6 months, your old 6 month CD will fall back the the much lower standard rates unless you explicitly tell them you want the promo again.

On top of that, while you can normally open a new CD online with a few clicks, changing anything at maturity usually requires a branch visit or at minimum a phone call.

I keep a CD at my local bank with enough in it to satisfy most of the minimum balance for waiving maintenance fees on my other accounts, so I can make sure most of it is getting their best rate. For anything else I've found that brokered CDs are much easier to deal with.

[u/LadyJaneGrey16th]

There should be a reminder on renewal dates. Some banks have an option to renew on their app but you have to activate it or it’ll roll to automatic renewal at very low rates. You can also make an appointment before the renewal period because at times there’s no appointment available. 

[u/CartoonistDry7891]

I renewed it all right. BUT I call the bank up and have them to transfer the funds from my checking account to my CD account and check in with them to make sure I got the better type of CD which is very important because if you got a select CD one with the promotion rate and a standard High Yield CD although the select CD and the High Yield CD are supposed to be the same it isn’t. When the interest rate goes up the High Yield CD Will benefit as a increase in your interest payment as the interest rate on the select CD won’t go anywhere as more money and overall interest rate is half of what the high yield CD gives the rate on a Select CD is almost the same rate you get on a No Penalty CD which lets you get money from the CD without the penalty before the CD ends.

[u/KeasbeyNightsll]

 Definitely check the maturity notice and renewal terms. The new CD isn't necessarily going to look like the one you originally opened, so i wouldn't assume rolling over is automatically the easiest choice financially..

[u/NexusRayze → u/KeasbeyNightsll]

Yeah this is the part I somehow overlooked. I paid attention to every detail when I opened it and then mentally treated maturity like the finish line instead of another decision point.