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How does the maturity date of a savings account or certificate of deposit affect the interest earned?

Curious about Maturity date

How does the maturity date of a savings account or certificate of deposit affect the interest earned?

The maturity date of a savings account or certificate of deposit (CD) determines when the account holder can withdraw their funds without incurring penalties or forfeiting interest. For savings accounts, there is typically no fixed maturity date, and the account holder can make withdrawals at any time without penalty. However, CDs have a fixed maturity date, which can range from a few months to several years, depending on the terms of the CD.

If the account holder withdraws funds from a CD before the maturity date, they may be subject to early withdrawal penalties, which can vary depending on the bank or financial institution and the terms of the CD. In general, the longer the term of the CD, the higher the interest rate offered, so withdrawing funds before the maturity date can result in lower overall returns.

Once the CD reaches its maturity date, the account holder has several options. They can choose to withdraw the funds, renew the CD for another term, or roll over the funds into another type of account. The interest earned on the CD up to the maturity date is typically paid out to the account holder at that time.

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