What Is a Renewable CD?

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A renewable CD is a type of deposit account that you can roll over into a new CD after the original CD matures. In some cases, renewable CDs are automatically renewable.

Key Takeaways

  • A renewable CD is a certificate of deposit that rolls over into a new CD after the initial one matures.
  • Some CD renewals occur automatically, while others offer investors the opportunity to decide if they wish to roll funds into a new CD after one matures, or withdraw and invest their money elsewhere.
  • The interest rates for a renewed CD might not be the same as they were for the initial CD, so you'll want to explore all options before accepting any rollovers.

How a Renewable CD Works

A renewable certificate of deposit is a savings account that pays interest on a fixed amount of money for an agreed-upon length of time, and allows you to start a new CD term after the first one reaches maturity.

Unlike a regular savings account where you might move money in and out a few times per month, a CD generally involves leaving your deposit in that account for the length of the CD’s term, which can be months to years. The longer you agree to leave your money in the account, the more interest you’ll typically earn. If you pull the money out before the CD reaches maturity, you often face penalties.


The Truth in Savings Act requires financial institutions to disclose what will happen to CDs at maturity if their terms are longer than one year.

With a renewable CD, your new term begins after the initial one ends. However, the interest rate wouldn’t necessarily be the same when your CD gets renewed. The funds will roll into a new CD that typically is based on current interest rates, not whatever the rate was for the previous CD. Different types of banks might offer renewable CDs but have their own nuances in terms of what they offer.

If the CD is automatically renewable, the financial institution should specify if there is a grace period. That would allow you to still withdraw your funds if you do not wish to start a new CD.

Once any grace period expires, the CD would renew with the financial institution. So, while renewable CDs can help you continue to earn interest, you might prefer to take their money out after maturity and explore other investment options rather than continue to hold it in a CD.


If you renew your CD, the interest accrued from the initial investment would also be rolled into the new CD, so you would start with a higher amount.

Example of a Renewable CD

Say you open a renewable five-year CD this year and it reaches maturity in five years. You have the option to renew after those five years. When renewal comes along, interest rates are higher than when you opened the CD, so you decide to renew. During your grace period, you consider withdrawing your money to invest in stocks. However, because stocks are higher risk and you want a low-risk investment option, you keep your money in the renewable CD. Once the grace period ends, your bank rolls your money into the new renewable CD.

What a Renewable CD Means for Individuals

Understanding renewable CDs can help individuals make better investment decisions. In general, investors might choose CDs if they want to reduce risk but still want to earn more interest than they would with a typical savings account. However, that doesn’t mean you should approach CDs without careful consideration.

In particular, a renewed CD would generally be based on current interest rates offered by the financial institution, so you may wish to compare rates and shop around for potential promotional rates on a new CD or other investment that may best suit your needs.


Some banks and credit unions offer promotional rates to entice investors to put their money into a new CD. Explore your options to determine if that is a better option than renewing your CD.

Frequently Asked Questions (FAQs)

What happens when a CD renews?

If you chose to renew your CD, you get a grace period. During this time, you can choose to withdraw your money with no penalty. Once the grace period is over, your CD term begins in earnest and, generally speaking, withdrawal penalties apply if you take out your money before the CD matures.

Does a CD automatically renew at the same rate?

Typically, no. When your CD renews, you'll get the rate available at the time of renewal. Because interest rates change often, the rate you earned on your original CD will likely be higher or lower than the one you get when you renew the CD.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Bank of America. “Savings Account or CD: Which Is Right for You?

  2. Office of the Comptroller of the Currency. “My Certificate of Deposit (CD) Matured, but I Didn't Redeem It. What Happened to My Funds?

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