Over the years, banks have set many policies to more easily earn money from their customers – one example is how difficult some make it to close CDs when they mature.
Almost any time you buy a CD, the bank sets it to automatically renew by default at its maturity. And in many cases, the yield of the renewed CD is well below the rate of the original term, allowing the bank to lock you in at a low rate if you’re not paying attention.
Although it’s understandable that banks would encourage you to renew a CD when it matures, it’s noteworthy how much they’ve set policies to make CDs difficult to close.
For instance, very few banks let you say in advance that you don’t want your CD to automatically renew – you have to wait until the day when the CD actually matures, and in many cases only have a small window to notify the bank that you want to close the CD.
Furthermore, while many banks let you easily open a CD online, many of those same banks don’t let you close it online – they require you to call them, visit a branch, or at the very least, send them an email. This practice lowers the likelihood that you’ll close the CD and gives them a last chance to talk you into renewing it instead.
We were wondering whether all banks have similar policies when it comes to closing CDs, so we contacted a few to find out how their various policies differ.
We first asked the banks whether customers could open and close CDs online, clarifying if the banks have a self-serve interface for closing CDs or whether customer’s needed to email the bank to stop a CD from auto-renewing. We then asked whether customers could give advanced notice to not auto-renew CDs, and how long after the CD matures they could contact the bank to close the CD. Below are the results:
| Bank Name | Open CD Online | Close CD Online | Advanced Close Notice | Post-Maturity Close Time |
|---|---|---|---|---|
| ING Direct | Yes | Yes | Any Time | 10 Days |
| Ally Bank | Yes | Via Email | Any Time | 10 Days |
| Citibank | Yes | Yes | 30 Days | 7 Days |
| HSBC Direct | Yes | Via Email | No | 10 Days |
| Bank of America | Yes | Via Email | No | 7 Days |
| PNC Bank | Yes | No | No | 10 Days |
| Chase Bank | Yes | No | No | 10 Days |
| Wells Fargo | Yes | No | No | 7 Days |
All the banks surveyed allow customers to open CDs online, but PNC, Chase, and Wells Fargo don’t let you close it online - they require you to call them during their business hours or drive to a branch. Bank of America, Ally, and HSBC Direct all say they let you close the CD online via emailing customer service whereas Citibank and ING Direct say they have the functionality to close a CD built into their online banking interface.
ING Direct and Ally Bank were the only two that said customers can give notice at any point that they want their CD to close instead of auto renewing. Citibank said they let customers give them notice up to 30 days in advance of maturity.
The other five banks all said that customers can’t give notice they want to close the CD until the day it matures, at which point they have 7 to 10 days to give notice. So if you happen to be on vacation when your CD matures, or just having a really busy week, the CD will automatically renew and there’s not much you can do about it.
What’s the advice for consumers? Before opening a CD, it’s good to ask about closing policies so you can understand the ease of stopping your CD from auto renewing at a low rate. It’s also important to get a feel for whether your bank offers high standard rates, or whether your CD rate is simply a promotional one and will likely renew at a lower yield.
Finally, it's important to set yourself a reminder for the day the CD is due to mature - at that point, you can check the latest CD rates and decide whether to intentionally renew your CD, rather than have the decision made for you.
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