After your certificate of deposit (CD) reaches maturity, your next steps will have a significant impact on your financial situation. CDs are low-risk accounts that earn interest over a set term. However, the maturity of your CD is not the end but rather an opportunity to maximize returns. Avoid these four common mistakes to continue growing your investment.
Do not overlook the grace period typically provided with your CD, lasting seven to 10 days after maturity. This period allows you to decide how to proceed with your funds. It’s important to review the terms of your CD and take note of the grace period duration to avoid missing out on better interest rates.
Instead of automatically rolling over your funds into a new CD without considering other options, explore different CD rates available in the market. Automatic rollovers may offer lower interest rates than the best available APYs. Research and compare the best CD rates to ensure you continue earning a competitive APY on your investment.
Leaving your money in a low-interest savings account post-maturity is not recommended. CDs offer higher interest rates compared to regular savings accounts. Consider transferring your funds to a high-yield savings account or reinvesting in another CD with better rates to maximize returns.
While earning a high return on your CD is beneficial, it’s essential to prioritize paying off high-interest debt, such as credit card balances with APR rates exceeding 25%. Clearing debt can improve your credit score, provide financial flexibility, and enable you to qualify for better credit card offers.
Upon maturity of your CD, take the opportunity to reassess your financial goals, pay down debt, and explore higher-yield savings options. By making informed decisions, you can optimize your finances and work towards achieving your financial objectives.
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