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CD Grace Period Bank Policies

July 23rd, 2009

So you’ve opened a new CD with a hot rate and you managed to lock it in for a year or two. Great job! But your work isn’t done yet. Unless your bank allows you to automatically withdraw the funds at maturity you need to keep track of when the CD rate expires.

Most banks will have the CD automatically roll over to their new rate if you miss out on their grace period. This means that you’re hot rate could plummet into a dark abyss. To make sure this doesn’t happen you have to make sure that you contact your bank during the grace period. This period varies from bank to bank but it typically lasts 7 to 10 days. Make sure you know what the grace period is BEFORE you open a CD.

Another thing you’ll need to know is how you must contact the bank in order to release your funds. Some banks let you call them to release funds. Other banks have a secure email system, while others use snail mail. Even worse, some banks require a notarized letter in order for you to get your funds back. Make sure you know what they’re going to need before you open the CD.

I suggest setting some kind of reminder when you open the CD. It doesn’t matter if the maturity is 2 years away, you’ll most likely forget the CD even exists and miss out on the grace period if you don’t keep track of it. Keep it in something like google calendar and have it remind you when it comes up.

If you take the proper steps then keeping your funds in the highest yielding CDs is not too much of a problem.

personal finance

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