By Sabrina Karl

Whenever you have a CD approaching maturity, take a page from the book of the savviest CD savers, who virtually never let their certificates roll over into an auto-renewed CD. Here’s why.

Usually about a month before your CD expires – when you can withdraw your principal and interest without incurring an early withdrawal penalty – the bank or credit union will notify you of the certificate’s upcoming maturity date. It will also provide instructions for indicating what you want done with the money, as well as what the bank will do with it should you fail to respond by the deadline.

If you don’t provide instructions – whether accidentally or intentionally – most institutions will roll the maturing funds directly into a new CD of an identical or similar term length. And therein lies the rub.

The CD market is chock full of options from hundreds of institutions offering a wide spectrum of rates – including plentiful specials and promotions – so smart CD saving always involves shopping around for competitive returns. Allowing auto-renewal forfeits all opportunity to seek out a top APY, as well as steals your chance to change your term or take the money elsewhere.

Instead, you’ll find yourself committed to what’s likely a standard or even lackluster rate, and for a fresh term that could be several years long.

This is particularly true when the maturing certificate was promotional. If you allow auto-renewal, your funds will roll into a standard CD (rollovers into special CDs are essentially unheard of), and that everyday rate is unlikely to be exceptional, and may not even be competitive.

What if you accidentally blow it and your CD auto-renews? Fortunately, most banks offer a grace period to cancel the new certificate without penalty. But it’s typically just 5 to 15 days, so you’ll need to act fast.