By Sabrina Karl

When you open a certificate of deposit, you’re entering into a contract with the bank or credit union to keep your funds deposited with them, earning a specified rate of return, for a set period of time.

That period is always explicitly defined by an end date, called the maturity date. And once that date hits, something will happen with your CD funds. What happens depends on instructions you make, or on the bank’s policy if you fail to provide any guidance.

The issuer of your CD will notify you when your CD is soon maturing. In that notification, they’ll indicate their policy on handling maturing funds if you do nothing. Most will roll the funds over into a new CD of a similar term and at current rates, while a smaller share of institutions will move the funds into a linked savings account.

The notification should also stipulate the grace period, which is the number of days after the official maturity date – usually one to 10 – during which you can still make instructions. After the grace period ends, your opportunity sunsets on deciding your own terms for handling the funds, and the bank’s default policy instead takes effect.

It’s always best to act before the maturity date, so you can direct the bank to move the funds into savings, or return them to you by check, or even transfer them to another institution. But should you miss that deadline, the grace period gives you a little cushion to still make a smart decision.

Note, however, that your CD will stop earning interest on the maturity date, regardless of entering the grace period. Your grace period provides only an extension for decision-making, not an extension of your interest-earning period. So funds will earn nothing during the grace period.