How much do you know about the CD’s automatic renewal policy? Are you aware that it could cost you a big chunk of money? You need to properly understand your certificate of deposit (CD’s) date of maturity so that you can avoid losing money through potential penalties.
Certificates of Deposits (CDs) refer to a type of financial product where you earn a higher interest rate than a conventional savings account. Investing your money in financial organizations such as credit unions and banks for a fixed period amounts to higher interest rates. When you invest over a period, it means you cannot withdraw your money without incurring a penalty until the fixed term elapses.
In most cases, the terms for a Certificate of Deposit ranges between six months and five years. After doing your assessment, you are free to decide on the amount of time you would like to subscribe to this service. The amount of money you assign to CD and the time help calculate the interest and yield you shall earn. If you are looking for higher benefits, you need to invest a large amount of money over an extended period.
The maturity date refers to the time when your CD commitment ends. You are free to remove your money from the CD when this time comes without incurring a penalty.
Automatic renewal refers to a policy set up by the financial institution to notify you that your maturity date has arrived. They further give information regarding their next course of action with your money if you fail to inform them of what to do with it upon maturity.
Here are some points about Certificate of Deposit:
One of the simplest and less risky ways to make more money is to let your CD for another term. Continuous renewals enable you to capitalize on the accumulating effect of money. Therefore, it means that you will earn interests in your previous period’s interests.
Before locking your money in a certificate of deposit, you should ask your financial institution the following questions.
Regardless of your financial institution’s automatic renewal policy, it would be best if you always had a reminder of when your CD(s) will mature. With that, you will have total control over your money.