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3 mistakes to avoid if your CD matures in 2024
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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.
Want to open a new CD account? See how high of an interest rate you could lock in here.
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.
Start exploring the CD rates and terms available to you online now.
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.
Have more questions? Learn more about your CD options today.
President-elect Donald Trump announced Wednesday that he intends to nominate cryptocurrency advocate Paul Atkins to chair the Securities and Exchange Commission.
Trump said Atkins, the CEO of Patomak Partners and a former SEC commissioner, was a “proven leader for common sense regulations.” In the years since leaving the SEC, Atkins has made the case against too much market regulation.
“He believes in the promise of robust, innovative capital markets that are responsive to the needs of Investors, & that provide capital to make our Economy the best in the World. He also recognizes that digital assets & other innovations are crucial to Making America Greater than Ever Before,” Trump wrote on Truth Social.
The commission oversees U.S. securities markets and investments and is currently led by Gary Gensler, who has been leading the U.S. government’s crackdown on the crypto industry. Gensler, who was nominated by President Joe Biden, announced last month that he would be stepping down from his post on the day that Trump is inaugurated — Jan. 20, 2025.
Trump, once a crypto skeptic, had pledged to make the U.S. “the crypto capital of the planet” and create a “strategic reserve” of bitcoin. Money has poured into crypto assets since he won. Bitcoin, the largest cryptocurrency, is now above $95,000. And shares in crypto platform Coinbase have surged more than 70% since the election.
Paul Grewal, chief legal officer of Coinbase, congratulated Atkins in a post on X.
“We appreciate his commitment to balance in regulating U.S. securities markets and look forward to his fresh leadership at (the SEC),” Grewal wrote. “It’s sorely needed and cannot come a day too soon.”
Congressman Brad Sherman, a California Democrat and a senior member of the House Financial Services Committee, said he worries Atkins would not sufficiently regulate cryptocurrencies as SEC chair.
“He’d probably take the position that no cryptocurrency is a security, and hence no exchange that deals with crypto is a securities exchange,” Sherman said. “The opportunity to defraud investors would be there in a very significant way.”
Atkins began his career as a lawyer and has a long history working in the financial markets sector, both in government and private practice. In the 1990s, he worked on the staffs of two former SEC chairmen, Richard C. Breeden and Arthur Levitt.
His work as an SEC commissioner started in 2002, a time when the fallout from corporate scandals at Enron and WorldCom had turned up the heat on Wall Street and its government regulators.
Atkins was widely considered the most conservative member of the SEC during his tenure at the agency and was known to have a strong free-market bent. As a commissioner, he called for greater transparency in and analysis of the costs and benefits of new SEC rules.
He also emphasized investor education and increased enforcement efforts against those who steal from investors over the internet, manipulate markets, engage in Ponzi schemes and other types of fraud.
At the same time, Atkins objected to stiff penalties imposed on companies accused of fraudulent conduct, contending that they did not deter crime. He caused a stir in the summer of 2006 when he said the practice of granting stock options to executives before the disclosure of news that was certain to increase the share price did not constitute insider trading.
U.S. Rep. Patrick McHenry, a North Carolina Republican and chairman of the House Financial Services Committee, said Atkins has the experience needed to “restore faith in the SEC.”
“I’m confident his leadership will lead to clarity for the digital asset ecosystem and ensure U.S. capital markets remain the envy of the world,” McHenry posted on X.
Atkins already has some experience working for Trump. During Trump’s first term, Atkins was a member of the President’s Strategic and Policy Forum, an advisory group of more than a dozen CEOs and business leaders who offered input on how to create jobs and speed economic growth.
In 2017, Atkins joined the Token Alliance, a cryptocurrency advocacy organization.
Crypto industry players welcomed Trump’s victory in the hopes that he would push through legislative and regulatory changes that they’ve long lobbied for.
Trump himself has launched World Liberty Financial, a new venture with family members to trade cryptocurrencies.
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