Certificate of Deposit rates

[hotcoffee]

When a CD matures and the investor allows it to sit... does the interest rate drop?

For instance, If I bought a CD 5 years ago... at a rate of 6%.... if I don't cash it out this year will it continue to earn 6% or will it decrease like the rest of the interest rates have done?

TIA....

 

[Tilted]

No. The bank will likely roll it over into a comparable CD yielding whatever such CDs are currently yielding. Which, by the way, isn't much and won't be much for quite some time. Mr. Bernanke and company made sure of that on Monday.

You should call your bank to make sure though. I've had CDs rolled over into new CDs that I didn't want (e.g. because I missed or didn't receive the notice), but been fortunate enough to have my bank allow me to cash them out as soon as I realized it without any kind of penalty. Other banks may not be so accommodating.

 

[desertrat]

When a CD matures and the investor allows it to sit... does the interest rate drop?

For instance, If I bought a CD 5 years ago... at a rate of 6%.... if I don't cash it out this year will it continue to earn 6% or will it decrease like the rest of the interest rates have done?

TIA....

The ones my Mom held got reinvested in shorter term lower rate ones. I think you need to tell them in advance what you want done perhaps?

 

[rabbithead]

Most banks give you 7 days after the maturity date to decide what you want to do. You should call the bank and find out what the current interest rates are- they WILL NOT be 6%!!! If you don't call them the bank will roll it over at the current rate- around 1%. I missed a maturity date one time and went to withdraw the money- I was penalized the entire year's interest.