Jan. 31, 2025

How Can You Maximize Returns When Your CD Matures?

Cash In or Roll Over? A Christian Perspective on Maturing CDs

CDs, or Certificates of Deposit, have long been a popular choice for individuals seeking a safe and predictable return on their investments ¹. But with interest rates constantly changing and a variety of alternative investment options available, deciding what to do when your CD matures can be challenging. Should you cash it in or roll it over? How Can You Maximize Returns When Your CD Matures? As Christians, how can we apply biblical wisdom to this financial decision? This blog post will explore these questions and offer guidance on making a smart move for your maturing CD.

Check out the full podcast episode:

Our Research Process

To provide you with the most informed and comprehensive advice, we conducted thorough research on the topic of maturing CDs. This involved several key steps:

Analyzing Current CD Rates: We examined current CD rates offered by various banks and credit unions, including Popular Direct, NASA Federal Credit Union, and Bread Savings, among others ². This allowed us to identify competitive rates and minimum deposit requirements. For example, as of January 2025, Bread Savings offers a 1-year CD with an APY of 4.10% for a minimum deposit of $1,500 ².
Investigating Historical CD Rate Trends: We delved into historical data to understand how CD rates have fluctuated over time ³. This historical context helps illustrate the dynamic nature of interest rates and emphasizes the importance of considering current market conditions when making CD-related decisions.
Exploring Expert Financial Advice: We reviewed articles and financial advice from reputable sources like Investopedia, Bankrate, and NerdWallet to understand the factors to consider when a CD matures and the potential risks and rewards of different options ⁴.
Integrating Christian Finance Principles: We explored Christian finance principles and how they might apply to CD decisions, drawing insights from resources like Peak Financial Management and My Faith Investments ⁶. This included considering principles of stewardship, contentment, and generosity.
Evaluating Alternative Investment Options: We researched alternative investment options for the money from a maturing CD, including high-yield savings accounts, money market accounts, bonds, and dividend-paying stocks ⁸. This allowed us to provide a broader perspective on investment choices beyond CDs.

By combining these research efforts, we aim to equip you with the knowledge and insights needed to make a wise and biblically informed decision about your maturing CD.

Understanding CDs and CD Maturity

A CD is a type of savings account that offers a fixed interest rate for a specific period, known as the "term" ¹. When you purchase a CD, you agree to leave your money in the account for that set term, which can range from a few months to several years. In return for this commitment, you receive a guaranteed interest rate that is typically higher than what you would earn in a regular savings account. CDs are generally considered low-risk investments, as they offer a fixed return and are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor ⁹.

Upon completion of its specified term, a CD reaches its maturity date. At this point, you have several options:

Cash in the CD: You can withdraw your principal and the accumulated interest.
Roll over the CD: You can reinvest the principal and interest into a new CD, either with the same or a different term.
Let the CD renew: Many banks will automatically renew your CD for the same term at the prevailing interest rate if you don't provide instructions within a grace period ¹⁰. This grace period is typically a short window of time, often around 10 days ⁴. It's crucial to act quickly during this grace period to avoid unintended consequences, such as having your CD automatically renewed at a potentially lower interest rate.

Factors to Consider When Your CD Matures

Deciding whether to cash in or roll over your CD depends on several factors:

Current Interest Rates: Compare the interest rate on your maturing CD to current CD rates. If rates have risen significantly, you might earn more by cashing in and opening a new CD with a higher rate ⁵. However, if rates have fallen, rolling over might be the better option to lock in a decent rate ¹¹. Resources like NerdWallet, Investopedia, and Bankrate provide up-to-date information on the best CD rates available ². Currently, some of the best CD rates are above 4% APY ¹³. For example, as of January 2025, Nuvision Credit Union offers a 5.50% APY for an 8-month CD with a maximum deposit of $5,000 ¹². It's important to consider the minimum deposit requirements as well. Some institutions, like Popular Direct, may require a minimum deposit of $10,000 for their higher-yield CDs ².
Historical Interest Rates: Understanding the historical context of CD rates can provide valuable insights. Over the past few decades, CD rates have fluctuated significantly ³. For instance, in the 1980s, CD rates reached as high as 18.65% ³. However, in the aftermath of the Great Recession and during the COVID-19 pandemic, rates plummeted to record lows ¹⁴. This historical perspective highlights the importance of not solely relying on past trends but considering the current economic climate and interest rate environment.
Your Financial Goals: What do you plan to do with the money? If you have a short-term need, such as a down payment on a house or a major purchase, cashing in might be necessary ¹⁵. If you're saving for a long-term goal like retirement, rolling over into a new CD or exploring other investment options might be more suitable. For example, if you're saving for a child's college education that's a few years away, a medium-term CD might be appropriate. However, if you're saving for retirement decades down the line, you might consider a longer-term CD or other investment options with potentially higher growth potential.
Your Risk Tolerance: CDs are generally considered low-risk investments, as they offer a fixed return and are FDIC-insured. However, it's important to acknowledge that CDs do carry some risks, such as inflation risk ¹⁶. Inflation can erode the purchasing power of your returns over time, meaning that the money you receive at maturity might not be worth as much in the future. If you're comfortable with a higher level of risk, you might consider alternatives like stocks or bonds, which have the potential for higher returns but also carry greater risk ⁸.
Time Horizon: How long do you want to keep your money invested? If you need access to the funds soon, a short-term CD or a high-yield savings account might be a better choice than a long-term CD ¹⁷. Longer-term CDs typically offer higher interest rates but also lock your money in for a longer period. If you anticipate needing the funds within a year or two, a short-term CD or a more liquid account might be preferable.
Potential Risks of Cashing In: Cashing in a CD before its maturity date can result in early withdrawal penalties, which can eat into your earnings ¹⁸. These penalties vary depending on the institution and the specific CD terms. It's essential to carefully review the terms and conditions of your CD to understand the potential penalties before making a decision.
Potential Risks of Rolling Over: While rolling over a CD can be a convenient way to maintain your investment, it's important to be aware of potential downsides. You might miss out on better rates offered by other institutions or find that the new interest rate isn't keeping up with inflation ¹⁹. Additionally, repeatedly rolling over CDs without actively managing your investments can lead to record-keeping challenges and potential missed opportunities.

Applying Christian Principles to Your Decision

As Christians, we should seek to align our financial decisions with biblical principles. Here are some key principles to consider when deciding what to do with your maturing CD:

Stewardship: The Bible teaches us to be wise stewards of the resources God has entrusted to us (Matthew 25:14-30). This means making informed and responsible decisions with our money. Proverbs 27:23-24 emphasizes the importance of diligence in managing our finances: "Be sure you know the condition of your flocks, give careful attention to your herds; for riches do not endure forever, and a crown is not secure for all generations." ⁶ Take the time to research your options, pray for guidance, and seek advice from trusted financial advisors if needed.
Contentment: Rather than constantly chasing the highest possible returns, cultivate contentment with what you have (Hebrews 13:5). A CD might not offer the most exciting returns, but it provides stability and security, which can be valuable in uncertain times. Remember that our ultimate security comes from God, not from our financial possessions.
Generosity: Consider how your financial decisions can be used to bless others and further God's kingdom (2 Corinthians 9:7). If you don't need the money from your CD immediately, could you use some of it to support a ministry, charity, or someone in need? Giving generously is a reflection of God's love and a way to invest in eternal treasures.

Exploring Alternative Investment Options

While CDs are a safe and reliable option, it's wise to be aware of alternative investment options that might better align with your financial goals and risk tolerance. Here's a table summarizing some alternatives:

Investment Option	Description	Potential Returns	Risks
High-yield savings accounts	Accounts that offer higher interest rates than traditional savings accounts while still providing easy access to your funds.	Moderate	Low risk of loss, but returns may not keep pace with inflation.
Money market accounts	Accounts that offer a balance of higher interest rates and liquidity, although they may have limited transaction options.	Moderate	Low risk of loss, but returns may be lower than other options.
Bonds	Debt securities that can offer higher returns than CDs, but they also carry more risk.	Moderate to high	Risk of loss if interest rates rise or the issuer defaults.
Dividend-paying stocks	Stocks that provide a stream of income through regular dividend payments, but their value can fluctuate.	Moderate to high	Risk of loss if the stock price declines or the company cuts dividends.
Paying down high-interest debt	Using the money from your CD to pay off high-interest debt, such as credit card debt or personal loans.	Variable, but can be significant	No risk of loss, and can free up cash flow for other purposes.

Paying down high-interest debt can be a financially sound and spiritually responsible alternative to rolling over a CD, especially when considered within the context of Christian finance principles that discourage debt (Proverbs 22:7) ²⁰. By eliminating high-interest debt, you can reduce your financial burdens and free up more resources for saving, investing, and giving.

Conclusion

Deciding whether to cash in or roll over your maturing CD is a personal choice that depends on your individual circumstances, financial goals, risk tolerance, and time horizon. While current interest rates and financial goals are important factors, Christians should also consider their risk tolerance, time horizon, and biblical principles when making this decision. By carefully weighing these factors and seeking God's guidance, you can make a wise decision that honors Him and helps you achieve your financial objectives. Remember to pray, seek advice from trusted sources, and be open to exploring alternative investment options that might be a better fit for your needs.

Works cited

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Ralph V. Estep, Jr.

Christian Financial Consulting

Ralph V. Estep, Jr. is a highly accomplished professional with a diverse background in finance, accounting, technology, and entrepreneurship. As the principal at Saggio Management Group, Inc., he has demonstrated exceptional leadership and expertise in various roles throughout his career.

Ralph's educational journey began at St. Mark's High School in Newark, Delaware before attending the University of Nebraska where he was an esteemed member of the Cornhusker Marching Band and had the privilege of performing at the Florida Citrus Bowl in Orlando.

Continuing his pursuit of knowledge and excellence, Ralph earned a Bachelor of Science Degree in Accounting from the University of Delaware. He further expanded his academic achievements by obtaining a Master's in Business Administration from Wilmington University.

Throughout his professional journey, Ralph has been recognized for his outstanding accomplishments and commitment to excellence. He is a member of prestigious organizations such as the Golden Key National Honor Society and Beta Gamma Sigma International Business Honor Society.

With an extensive range of professional designations including Licensed Public Accountant (LPA), Accredited Business Accountant (ABA), Accredited Tax Advisor (ATA), Accredited Tax Preparer (ATP), and Internal Revenue Service Registered Tax Preparer (RTRP), Ralph possesses comprehensive expertise in tax preparation and financial management.

Beyond his impressive qualifications, Ralph has actively engaged with various community programs as bo… Read More

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