when a term deposit is nearing its maturity date the bank holding the deposit will usually send a letter notifying the customer of the upcoming maturity in the letter the bank will ask if the customer wants the deposit renewed again for the same length to maturity 6 the rollover will likely be at a different rate based on the market interest rate at that time alternatively the customer has the option of placing the funds in another financial product 
investors holding retirement cds should speak to a financial planner or tax advisor who can explain the different regulations involved in early withdrawal from these investments inflation and term depositsunfortunately term deposits do not keep up with inflation the inflation rate is a measure of how much prices rise in a given year if the rate on a term deposit is 2 and the inflation rate in the u s is 2 5 theoretically the customer is not earning enough to compensate for price increases in the economy laddering strategyrather than investing a large lump sum into one term deposit an investor may use a strategy that spreads out the funds between several cds this strategy for investing using term deposits is to distribute an investment evenly over a set number of years with maturities coming at regular intervals this laddering investment strategy locks in the interest rates with the cds at longer terms having higher rates than those with shorter terms as the cds mature the customer can choose to use the money for income by withdrawing the funds or roll those funds into another cd to continue the ladder the method allows the investor to have access to funds as they mature for example an investor can deposit 3 000 each into a five four three two and one year term deposit one of the cds matures each year which allows the customer to either withdraw the money for expenses or roll the funds into a new account the new term deposit will have a rate based on the current market rate this method is popular for retirees who need to withdraw a set amount of income each year from their savings to pay for living expenses the strategy can be used while investing with the same credit union or bank or across several different institutions the investor can either withdraw the principal and interest upon maturity or reinvest the funds if they are not needed term deposits offer a fixed rate of interest over the life of the investment term deposits are risk free safe investments since they re either backed by the fdic or the ncua various maturities allow investors to stagger end dates to create an investment ladder term deposits have a low minimum deposit amount term deposits pay higher rates for larger initial deposit amounts interest rates paid on term deposits are typically lower or less attractive than most fixed rate investments term deposits can t be withdrawn early without penalty or losing all of the interest earned interest rates don t keep up with rising inflation interest rate risk exists if investors are locked in a low rate term deposit while overall interest rates are rising example of term depositswells fargo bank wfc is one of the largest consumer banks in the u s and offers several types of term deposits below are a few of the bank s cds along with the interest rates paid to depositors as of june 10 2024 7please note that the interest rates being offered by the bank can change anytime for new cds and might be different depending on the state in which the branch is located 