A certificate of deposit (CD) account has historically been a smart way to protect your money – both against economic headwinds and the personal temptation to overspend. In recent years, however, it’s also been a key way to protect against inflation and higher borrowing costs. With interest rates on these accounts exponentially higher than they were in 2020 and 2021, it made sense for savers to open an account to take advantage of the higher rate climate. And, if you opened a CD in 2023 or earlier in 2024, you may have earned hundreds or even thousands of dollars in interest, depending on the account interest rate and the opening deposit amount. 

But with the end of the year quickly approaching, and CD maturity dates in 2024 on the calendar for many savers, it helps to know which steps to take now to continue earning big returns. It can also help savers to know which mistakes to avoid if their CD is set to mature before January 1, 2025. Below, we’ll break down three to be aware of.

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3 mistakes to avoid if your CD matures in 2024

Here are three critical (and costly) mistakes to avoid if your CD account is set to mature in the final weeks of 2024:

Letting it automatically roll over

In some instances, particularly in recent years, an automatic rollover wouldn’t be much of a mistake. In today’s evolving interest rate climate, however, it could be a critical one. If you opened a 1-year CD last December, for example, you may have locked in a rate around 5.50%. But today’s high 1-year CD rates top out around 4.50% – a full percentage point lower than what was available in December 2023. So, letting it automatically roll over to a much lower rate could be a costly mistake, particularly if you need to pay an early withdrawal penalty to access your money again. Instead, start talking to your lender now to see which rate you would get if you let it roll over – and which ones are available if you withdraw your funds upon maturity.

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Assuming you’ll be able to lock in the same rate again

Even if you don’t let your account automatically roll over into another, it would be a mistake to assume that you’ll be able to lock in the same rate and term again. After all, inflation has been dropping for much of 2024. And two interest rate cuts have already been issued this year with a third likely for when the Federal Reserve meets again this month. So you’ll be hard-pressed to find the same high rate. That doesn’t mean that it’s worth withdrawing your money. Today’s CD rates are still high, historically speaking. But it may require a bit more work to find the highest rate and best terms than it would have, for example, at this time in 2023. 

Opening a short-term one to replace it

It can be tempting to open a short-term CD now to replace the one approaching maturity. But, for many savers, that would be a mistake. Short-term CDs only have slightly higher interest rates than their long-term counterparts right now. And with interest rate cuts becoming somewhat routine (if unpredictable), that higher rate may not be worth it for just a few months when you can lock in a similarly high one for a few years. So calculate your potential earnings tied to a few rates and terms. You may be surprised at how much more you can make by simply moving your funds into a long-term account instead.

The bottom line

While CD rates are still elevated, they aren’t quite as attractive as they were this time last year. So savers with accounts set to mature before 2025 should be strategic in their approach. By avoiding an automatic rollover and the assumption that the interest rate will remain the same, savers can better position their money for additional interest-earning success. And, for many, that may mean forgoing short-term CDs and their slightly higher interest rates for long-term ones and their slightly lower rates instead.

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