Cashing Out a CD in April 2025? Avoid These 4 Costly Mistakes

With CD yields still hovering in the 4.50% range, you really need to be picky when choosing where to put your cash.

Especially if you're cashing out of an existing CD. If you don't take action when a CD matures, your bank might quietly roll your funds into a new CD -- locking them up again, potentially at a lower rate.

If you're cashing out a CD soon, avoid these top mistakes.

1. Letting your bank auto-renew your CD

Most CDs have something called a "grace period." This is usually a seven- to 10-day window after the maturity date in which you can withdraw your money without penalty.

Guess what happens if you miss this grace period? Banks typically auto-renew your CD -- which may (or may not) be in your best interest.

Even worse: Not all banks send you a reminder!

While auto-renewal isn't always bad, don't assume that it's the best option forward.

What to do instead:

• Set a calendar reminder with your CD maturity date and the grace period window.
• Log in to your account the day it matures and choose "withdraw" or "close CD" (wording varies a little by bank).
• Make a quick decision about the next best place to put your money.

If you want to open a new CD, be sure to shop around for the best available CD rates across all banks.

2. Letting their money sit idle after withdrawal

A lot of people cash out their CD into a checking account, then think, "I'll just wait a few days and figure out my next move later." Then six months slip by and they've missed out on hundreds in earning potential. Don't fall into this trap!

A good practice is to withdraw money directly into an HYSA during the grace period. That way if you don't have an immediate next step lined up, you'll still be earning competitive interest on your cash.

Whatever you do, don't request a check withdrawal and then wait months to cash it. Or cash money out into a low-APY savings account earning pennies. Be proactive and make a plan for earning the most you can, as soon as you can.

3. Reinvesting without rate shopping

If your CD was earning 1.00% or 2.00% when you opened it, things have changed big time since then.

As of April 2025, many high-yield CDs are paying well over 4.00% APY.

Here's a quick 12-month yield comparison, based on a balance of $20,000:

Don't just accept the rates offered by your current bank. Shop around, because there's likely something better available elsewhere.

Want to see the latest rates? Check out our list of the top CDs for April 2025.

4. Cashing out early without understanding the penalty

If your CD isn't quite mature yet, resist the urge to cash out early. That's because banks charge a penalty for doing so -- which means you might forfeit three to 12 months' worth of interest.

Let's say you're earning 5.00% APY on a $10,000 CD and you withdraw three months early. You could lose $125 or more in penalties -- which might wipe out a good chunk of your earnings.

Make your exit count

Cashing out a CD shouldn't be an afterthought. Stay ahead of the due date by researching the best options moving forward and making an action plan.

And definitely don't let your bank auto-renew your CD into a lower rate. There are way better options, and moving that money only takes a few minutes of your time.