Your certificate is reaching maturity – now what

When your certificate matures, you may find yourself at a crossroads, asking yourself questions such as: Do I need the money immediately? Do I want to continue to grow my savings?

If you need the money soon, transferring it into your savings account might be the best option. However, renewing the certificate might be the better choice if you don’t need the money soon and want to continue saving at a higher rate.

Here is a summary of the most common choices:

What you'll learn:

• Option 1: Renew into the same certificate term
• Option 2: Renew into a new certificate term
• Option 3: Transfer money into a savings account

Option 1: Renew into the same certificate term

If you do not need your funds soon, you can maximize your earnings and choose not to do anything with your certificate. As long as it is set to renew automatically, it will roll into the same certificate with the same terms. However, even if the term is the same, the interest rate might not be. This is the easy option if you know that you still don’t need the funds and are happy with the current terms and rates. Just don’t forget about this certificate once the next maturity date rolls around!

Option 2: Renew into a new certificate term

With certificate rates lower than last year, you may wonder whether rolling your money into another certificate is the best option. However, even if the certificate rates aren’t as high as before, they could still be higher than those of a savings account. Check out Alliant’s current certificate rates.

This might also be a good time to start a certificate ladder. Certificate laddering is a strategy where you invest a lump sum into multiple certificates with staggered maturity dates. When the shortest-term certificate matures, you can reinvest the funds from that one (unless you need it for one thing or another) into one that matches the longest-term certificate. This way, you will benefit from the higher interest rate but also know that a certificate will always reach maturity soon if you need the funds.

Option 3: Transfer money into a savings account

If you don’t want to lock your money into a certificate for a set amount of time again, a high-yield savings account is another option. With these accounts, you will get higher interest than traditional savings accounts, and your money will be more readily available.

Your financial institution should send you a communication a few weeks before your maturity date to remind you that your certificate is reaching maturity. Depending on your bank, you might be able to log in online early and modify your certificate maturity settings.

If you forget, you have a few days to withdraw the funds without penalty. This is called the grace period. Depending on your bank or credit union, the grace period can be anywhere from a few days to two weeks. Still, it is a good idea to check with your bank before your certificate reaches maturity so you aren’t blindsided. You won’t be penalized for taking the money out during the grace period.

While certificates work well for long-term goals, savings accounts work well for short-term goals. They are also great for building your emergency fund since your money is easily accessible when an emergency hits.