5 easy ways to earn big returns after your CD matures

March 28, 2024

Watering Money to Make it Grow
Reinvesting with the right strategy could help your money grow quickly after your CD matures.

S Froebe/Getty Images


Opening a certificate of deposit (CD) can be a smart move right now. Not only are CD rates higher than they’ve been in recent years, but putting your money in a CD is also a safe, guaranteed way to earn interest on your funds. That’s because, by agreeing to leave your money in the CD account for the specified term, you receive a fixed rate of interest, one that can be as high as 5.5% or more right now, depending on the account.

What happens after your CD term is over, though? Once your CD account reaches maturity, you have a critical decision to make. You’ll need to decide whether you should reinvest the funds from the account into a new CD or explore other investment avenues. You also have the option of letting your CD roll over at the rate being offered by your current financial institution.

But while a CD rollover can seem like an attractive, simple option, there are often better strategies to grow that lump sum and earn higher yields. As you determine what to do with the sizable cash from your matured CD, consider a few smart CD reinvestment strategies instead.

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5 easy ways to earn big returns after your CD matures

The strategies outlined below could help you earn hefty returns on your money after your CD has matured:

Ladder the money into multiple CDs

Rather than putting all of the money from your original CD account into one new CD, consider building a CD ladder after it hits maturity instead. A CD ladder is a savings strategy that involves staggering the maturity dates of multiple CDs to take advantage of higher interest rates and maintain access to a portion of your funds on a regular basis.

Here’s how a CD ladder typically works:

  • You divide your total investment amount into equal portions and use each portion to open a new CD with a different term. For example, you can split the money equally between 1-year, 2-year, 3-year and 5-year CDs instead. 
  • When the shortest-term CD in the ladder matures, you reinvest that money into a new CD with the longest maturity date you’ve chosen for the ladder.
  • You continue this process as each CD hits maturity, reinvesting the principal and interest from the maturing CD into a new long-term CD, effectively creating a laddering effect.

The primary benefits of a CD ladder include:

  • Access to funds: Since one CD matures each year (or at whatever interval you’ve chosen), you ensure that you have regular access to a portion of your funds without paying early withdrawal penalties.
  • Higher interest rates: By reinvesting in a new CD as each account matures, you can take advantage of the potentially higher interest rates being offered at that point.
  • Diversification: With multiple CDs maturing at different times, you can take advantage of various interest rate environments over time.

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Open a higher-yield CD

If you want to continue to earn interest with a CD, don’t just automatically reinvest with the same bank. Shop around and compare offers from multiple financial institutions, as the rates and terms offered can vary significantly from one to the next. And, as you shop around for CD accounts, be sure to include offers from reputable online banks, which often offer higher CD yields compared to brick-and-mortar institutions due to having lower overhead costs.

For example, the current average 5-year CD rate is just above 1.4% APY. But many banks, including online-only institutions, currently offer rates on 5-year CDs that hover above 4.5% APY — over triple the national average. So, if you want to continue to earn interest with a CD account, chances are that you can find a much better offer than the average simply by shopping around. 

Blend with a CD IRA

For retirement savers, it could benefit you to consider splitting your CD funds between a conventional CD and a CD held within an IRA account. This dual strategy allows a portion of your assets to benefit from the tax-deferred growth offered by an IRA, letting that money compound faster over years or decades.

Just be mindful of IRS limits and rules on IRA contributions, as you’ll need to adhere to these guidelines when you take this route. But in many cases, this blended approach can accelerate the growth of your investment compared to leaving it all in a taxable CD account, so it can be worth weighing this option if you’re heavily focused on saving for retirement.

Invest in a bond ladder

If you want higher potential returns with relatively low risk, you may want to look into building a bond ladder instead of relying solely on CDs. This strategy is similar to the CD laddering concept but with individual bonds or a bond mutual fund rather than CDs.

With a bond ladder, bonds of varying maturities and yields are staggered, creating a portfolio that generates interest income while being strategically reinvested as bonds mature. Over the life of the ladder, the reinvestment of maturing bonds into new bonds with higher prevailing yields boosts your overall returns.

While this option is more complex than CDs, the right bond ladder strategy can yield high returns with moderate levels of risk if designed and managed properly. As with any investment, though, you’ll need to do your research and ensure that you understand the parameters of this type of investment, and are confident with the strategy you’ve chosen, before committing to it.

Switch to another type of investment

CDs are a safe way to earn big interest on your money, especially right now. But for those with longer time horizons and the ability to withstand more market volatility, the right move may be to switch strategies after your latest CD matures

For example, you could reallocate the funds from your CD into more growth-oriented investments like low-cost stock index funds or a diversified portfolio of individual stocks instead. While your returns can vary based on a range of factors, the average long-term returns of the stock market are generally much higher than what you can earn with even the top CD rates available today. 

So, if you reinvest your CD money and ride out any market waves, you could see it grow substantially over time. That said, this is a risky plan, and it’s not the right move for everyone. For more risk-averse investors, or for those who want to ensure guaranteed returns on their money, switching to a CD ladder or a higher-yield CD could make more sense.

The bottom line

There are lots of good options to consider after your CD account matures, many of which could offer you big returns on your money. But no matter which reinvestment direction you choose after your CD matures, be sure to carefully assess your financial goals, risk tolerance and time horizon. A little strategic planning can ensure you earn substantially better returns on your money — especially compared to automatically rolling it over into the same CD account.

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