What is Certificate of Deposit Maturity?

Review your CD maturity options and learn how a CD matures

When exploring certificates of deposit, or CDs, as an investment opportunity, you'll probably be closely comparing interest rates, early withdrawal penalties and the terms associated with each CD choice. Certificate of deposit maturity is the technical name for those terms. In addition to referencing the length of the term, CD maturity also refers to the return on your investment. Most CDs mature monthly, meaning they accrue interest each month.

CD maturity basics

When your bank CD matures, you can withdraw your money without paying penalties. Prior to that, withdrawals are subject to fees. On the date of maturity, you may also consider rolling the funds into a new CD, which would mean accepting new terms.

When shopping for a certificate of deposit, be sure to note if the CD matures at a flat or compounding interest rate.

  • At a flat interest rate, you'll earn interest only on your opening deposit. If you opened it with $2,000 and it has annual percentage rate, or APR, of 2%, you'll earn $40 each year.
  • If it's a compounding interest rate, you'll earn interest on the balance at the end of each year. In this case the CD will have what's known as an annual percentage yield, or APY. At the end of the first year, you'd have $2,040. Interest would then accrue on your new balance the next year.

When you open a CD, you'll have your choice of maturity dates. Some are very short - three or six months - and these also tend to have the lower interest rates. The longer the term, or the further into the future the CD maturity date, the higher the interest rate. You can find CD terms as long as five years.

Choosing multiple CD maturity dates

If you're unsure which CD maturity date is right for you, you could consider a strategy called CD laddering. Let's say you have $4,000 you want to invest in a CD. Rather than put that all into one CD, you could break those funds up and open a couple CDs with different maturity dates. This way, you'll have a shorter CD so you have the peace of mind of knowing your money will be available if you need it sooner rather than later. But, then you can also open CDs with later maturity dates so you can reap the benefits of the higher interest rates. This gives you the benefits of liquidity as well as control as to the amount of money you'll be able to access at any given time.

Open a certificate of deposit with Citizens Bank

CDs are FDIC-insured investments, making them safer than stocks. Plus, interest rates on CDs tend to be better than on other savings account products because you commit to keeping your money with the bank for the term of the CD, or until it the CD matures. Explore certificates of deposit from Citizens Bank, or call a customer care representative at 1-877-360-2472.


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