When the end of your certificate of deposit (CD) term approaches, your CD provider will contact you with your options. Your CD provider may tell you that your CD will automatically roll over, or you may have to select that option before the end of the term. If you do nothing, the CD provider may roll the money over automatically. You can also withdraw the money, along with the interest you earned, when your CD reaches maturity.

Before your CD matures, learn the rules that apply and check the interest rate on the new CD because it could be lower than the previous rate. It's often best to shop around for the best CD rates than to allow automatic rollovers.

How to Roll Over a CD

For most CDs, you don’t need to do anything to have them roll over into a new CD of a similar length—most CDs held with most banks and building societies will automatically roll over if you do nothing. 

Each bank, credit union, and other CD provider has its own rules when it comes to CD maturities. When your CD is close to maturing, your provider should contact you and explain your options. Typically, they will offer you three options:

• Transfer the funds into another account at that bank: Options include a savings, checking, or money market account.
• Withdraw the proceeds: They can be transferred to an external bank account or mailed to you in a paper check. 
• Roll over the CD into a new CD at that bank: Generally, this would be into a CD that most closely matches the term of your maturing CD. For example, if you have a one-year CD concluding, they would likely roll your balance into a new one-year CD.

For most CDs, the third option is the default one: If you do nothing, your CD will roll over into a new one that matches the existing term. You should check with your provider as to what their rules are, however, because each provider sets its own.

Finding the Best CD Rates

As discussed, generally, when a CD expires it will automatically roll over unless you take prior action. When a CD rolls over, however, the new interest rate might be different than the one you were receiving. The new CD will have the same term, e.g. a 12-month CD will be rolled over into a new 12-month CD. The interest rate, however, could be different depending on the current interest rate environment.

When your CD expires and you take no action to withdraw the money or instruct your CD provider not to roll over the funds, at least confirm the new interest rate and if it aligns with your investment objective, otherwise you could be losing out on better returns in another investment product.

CD interest rates are not completely determined by the CD provider; they depend on a host of factors and generally follow the prime rate, which is influenced by the fed funds rate. If a nation's central bank is trying to slow down the economy, interest rates will be higher, which makes CDs more attractive. Conversely, if they're trying to stimulate the economy, interest rates will be low, making CDs less attractive.

You could have purchased your CD in a high interest rate environment but when your CD rolls over, it could be in a low interest rate environment, causing you to earn significantly less on your new CD than your prior one.

If you do want to continue investing in a CD if the rate environment is good, take the time to evaluate the rates offered by different providers before your CD reaches maturity. And if you haven't found a provider you like, instruct your bank to move your CD funds into your savings account upon maturity. That way, you'll have the option to find the right CD for you rather than being locked up in one that may no longer serve your investment purposes.

The Bottom Line

When a CD reaches maturity, your bank or credit union should write to you to outline your options. Typically, you will be given a short window in which to withdraw your funds. If you do nothing, your CD will likely roll over into a new CD. 

The term length of your new CD will normally be similar to your previous one, but the interest rate may be different. Your bank or credit union will pay you the same interest rate as new CD customers and this rate might be lower or higher than your previous rate. If you want to make sure that your CD is paying the highest possible rates, you should shop around each time your CD matures.