CD Maturing in a Low-Rate Market? Here’s a Plan From a Financial Planner
Written by
Martin Dasko
Edited by
Jenna Klaverweiden
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The most recent consumer price index (CPI) data showed that prices increased 0.1% in May, bringing the annual inflation rate to 2.4%. While economists and experts track this data to predict whether the Fed will cut rates, investors are debating how to proceed in this environment.
One popular investment during 2022 and 2023, when the Fed was raising rates, was a certificate of deposit (CD) because they provided a better return on your money. A CNET article shared advice on what to do when you find yourself with a CD that’s set to mature in a low-rate market. If the Fed starts cutting rates, then CDs will likely offer lower rates and may become less appealing.
“When a CD matures in a falling-rate market, it can be tough to know what to do next,” said Taylor Kovar, CFP, founder of 11 Financial. Kovar spoke with GOBankingRates to help you decide on the best approach of what to do with a maturing CD amid falling interest rates.
Consider Your Financial Goals
Kovar stressed that your financial goals should drive your entire decision when it comes to determining what to do with a CD that will mature soon.
“If this money is part of your emergency fund or something you’ll need soon, then keeping it accessible matters way more than squeezing out a little extra interest. However, if you’re not planning to use it for a while, it’s worth storing it somewhere that works better for you,” he said.
Financial experts believe that every dollar needs a job, and your goals help you figure out what that job is. For example, if you plan to make an offer on a home in the near future, it’s advisable to have access to your funds, as you may need to use them. However, if you’re still building up your savings, you may want a simple investment strategy as you focus on advancing your career.
Roll Over Your CD
If you decide to have an auto-renew set for your CD or if you simply want to let the funds roll over into a new CD, it’s essential to note that the rate won’t remain the same.
“Locking in a new one at a lower rate doesn’t feel great, but letting the money sit idle isn’t ideal either,” Kovar said.
Kovar recommended that you don’t auto-renew without looking around first, since the environment has changed since you locked into the CD a few years ago. “Some short-term CDs are still offering decent rates, and if you’re not planning to touch the money anytime soon, that could work,” he said. On the contrary, if the new rate feels too low and you don’t want your funds locked in, you’ll want to explore better options.
Withdraw the Funds and Create a CD Ladder
“One option is to break up the amount and build a short CD ladder,” Kovar explained. “You’re able to keep some flexibility while still earning interest.”
By setting up a CD ladder, you invest your funds in multiple CDs with different terms. Multiple CDs with varying dates of maturity will provide flexibility while allowing you to optimize the best interest rates.
This option could help earn more without risking your funds in the stock market or other investments that have been volatile in 2025.
Withdraw the Funds To Find a Better Investment
Kovar noted that before making any changes, it’s worth shopping around for better investment options, as online banks and credit unions typically offer more competitive rates than your current bank. Your best options for a better investment include a high-yield savings account, a money market account or even a short-term Treasury.
You’ll want to explore various options to ensure you find the best investment for your situation based on your financial goals. For example, a high-yield savings account could offer a higher APY while providing you with the ability to withdraw your funds at any time without a penalty. You may decide that it’s time to start investing in index funds or real estate.
Either way, it’s crucial that you take the time to seek professional financial advice so that you make a well-informed decision.
Withdraw the Funds To Cover Expenses
If you earned a decent return on your funds, you can withdraw the money and use it to cover a significant expense when the CD matures. You may find that your investment paid off, and it’s time for the funds to be put to use in another way. You could use the money to pay off debt or to cover the costs of your upcoming wedding.
Whatever you decide on, it’s important to remember that you can always use this money as you see fit.
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