Answers About CDs and Certificates of Deposit
Select from the following questions about certificates of deposits or CDs.
- My CD matured today, but the bank will not release the funds to me.
- My CD matured, but I didn't redeem it. What happened to my funds?
- What are the penalties for withdrawing money early from a Time Certificate of Deposit (CD)?
- Does the bank have to continue to pay interest on my Time Certificate of Deposit (CD) after it matures?
- Interest rates have gone up, but the bank refuses to raise the rate on my time certificate of deposit (CD). Why?
- I cashed my Time Certificate of Deposit (CD) before it matured, and the bank charged me an early withdrawal penalty. Can it do this?
My CD matured today, but the bank will not release the funds to me.
Generally, the financial institution may not process the CD at the branch. It will be forwarded for processing, and you will receive a check in the mail.
My CD matured, but I didn't redeem it. What happened to my funds?
Review your time deposit agreement to determine the bank's policy.
What are the penalties for withdrawing money early from a Time Certificate of Deposit (CD)?
Federal law stipulates that all time certificates of deposit (CD) that are cashed out early are subject to a minimum penalty. If you withdraw an amount within the first six days after deposit, the penalty consists of at least seven days' simple interest. Other than that, national banks can set their own penalties; there is no maximum.
Additionally, you may want to review the Account Agreement that the bank provided when you opened the account, as it explains the early withdrawal penalties.
Does the bank have to continue to pay interest on my Time Certificate of Deposit (CD) after it matures?
Not necessarily. If you choose to roll over/renew the time certificate of deposit (CD) for another term at the bank, the bank can continue to pay the interest.
Let's say you haven't decided in advance. Once the CD matures, you have 10 days to decide whether to renew or withdraw the funds. The bank can continue to pay interest until you decide, but it's entirely up to the bank.
You may want to review your Account Agreement, which explains if interest is paid after maturity. You should have received this Agreement when you opened the account.
Interest rates have gone up, but the bank refuses to raise the rate on my time certificate of deposit (CD). Why?
When you buy a CD, you enter into a contract involving a fixed amount of money (principal) for a predetermined period of time (the term) and an agreed-upon interest rate and yield. The bank is simply honoring the terms of the contract; it is not obligated to change those terms when interest rates change.
Please refer to the Account Agreement you received when you bought the CD for the terms and conditions of the account.
I cashed my Time Certificate of Deposit (CD) before it matured, and the bank charged me an early withdrawal penalty. Can it do this?
Yes. Time Certificates of Deposits (CD) are not liquid: When you buy one, you enter into a contract involving a fixed amount of money (principal) for a predetermined period of time (the term) and an agreed-upon interest rate and yield.
Banks are permitted to assess an early withdrawal penalty whenever funds from a time deposit are withdrawn prior to the date of maturity. This penalty should be explained in the Account Agreement you received when you opened your account.