Cashing in a CD by a certain age....

[happyscooter]

Other than an IRA, is there ever any legal reason that says a CD has to be cashed in by a certain age?

[MN-Investor]

Not that I've ever heard of. Lots of older folks have CDs.

[happyscooter]

I didn't think so. But someone told me there was.

The same person who told me that I couldn't get a mortgage because I was too young. (I was 23).

Why do I listen to uninformed people??

[happyscooter]

This wasn't an IRA. Just a regular CD.

[Tiny]

Maybe it's just confusion over the fact that when a CD matures - you have a 'grace period' when you can withdraw from the CD or change the length of the term on the CD without incurring a penalty/charge. (it's the CDs age not your own age). If you do nothing when the CD 'matures' - odds are it will automatically renew (usually for the same amount of time as the original CD).
If you want to get at the money once the CD renews you may incur various penalties (loose interest) or some other fee.

Maybe they are confusing Savings Bonds with CDs... at some point a Bond will stop accrueing interest - you don't need to cash it it at that point but it won't earn anymore money...
This is why you should always listen to 'advice' but then go and verify that the 'advice' was really the way things work.

[happyscooter]

No, this person definitely told me that it had to be cashed out. No IRA. Again, I didn't think so. But I don't like it when someone says 'I know what I am talking about', so I don't want to be one of those people. I just say 'I don't think so' and drop the subject.

[Wisconsin Beth]

Mar 20, 2011 15:27:44 GMT -5 Tiny said:

Maybe it's just confusion over the fact that when a CD matures - you have a 'grace period' when you can withdraw from the CD or change the length of the term on the CD without incurring a penalty/charge. (it's the CDs age not your own age). If you do nothing when the CD 'matures' - odds are it will automatically renew (usually for the same amount of time as the original CD).
If you want to get at the money once the CD renews you may incur various penalties (loose interest) or some other fee.

Maybe they are confusing Savings Bonds with CDs... at some point a Bond will stop accrueing interest - you don't need to cash it it at that point but it won't earn anymore money...
This is why you should always listen to 'advice' but then go and verify that the 'advice' was really the way things work.

I'm with this. I've had CDs mature/expire and my bank usually granted us 10 days from the date of expiration to deal with it or they would roll it over into another CD.

My IRA is currently in CD form. It matures in August and at that time I'll be shifting it to something else, where I can restart auto-deposits to it.

[happyscooter]

Beth, since you brought that up, it begs another question. If I have my IRA in a 3 year CD and it matures next year, can I roll it over and add more $$$ to the $6k? I could open a new CD with the additional money but if I could put it with the 6K, my interest would be more in 10 years right?

Phil, SF, Paul, GardeningGrandma?

[Plain Old Petunia]

HappyScooter, it depends on the terms. Are you offered a higher rate because you have a higher balance? If you have 2 cds of 6k each, both earning say 2%, then that is no different from 1 cd of 12k earning 2%.

[happyscooter]

Gotcha. I'm still learning. However, it's nice to have money to learn with.

[Wisconsin Beth]

Mar 21, 2011 12:22:52 GMT -5 happyscooter said:

Beth, since you brought that up, it begs another question. If I have my IRA in a 3 year CD and it matures next year, can I roll it over and add more $$$ to the $6k? I could open a new CD with the additional money but if I could put it with the 6K, my interest would be more in 10 years right?

Phil, SF, Paul, GardeningGrandma?

Yep, that's essentially what we've been doing with my IRA for the last 3 years. Rounding up to whatever makes sense and rolling it back into the next CD. We didn't come close to putting in enough to max it. I opted for a 2 year CD the last time it was up for renewal because I didn't have the time/energy to figure out where to it. My bank adds the interest every 6 months (which I think brought me to just over $8900.) I think the penalty for early withdrawal is 6 months of interest but we were on the "roll it over and ignore" plan.

Guess I need to start figuring out where to move it and how much DH and I can afford to start the auto-deposits with...

[Wisconsin Beth]

Mar 21, 2011 12:41:34 GMT -5 Wisconsin Beth said:

Mar 21, 2011 12:22:52 GMT -5 happyscooter said:

Beth, since you brought that up, it begs another question. If I have my IRA in a 3 year CD and it matures next year, can I roll it over and add more $$$ to the $6k? I could open a new CD with the additional money but if I could put it with the 6K, my interest would be more in 10 years right?

Phil, SF, Paul, GardeningGrandma?

Yep, that's essentially what we've been doing with my IRA for the last 3 years. Rounding up to whatever makes sense and rolling it back into the next CD. We didn't come close to putting in enough to max it. I opted for a 2 year CD the last time it was up for renewal because I didn't have the time/energy to figure out where to it. My bank adds the interest every 6 months (which I think brought me to just over $8900.) I think the penalty for early withdrawal is 6 months of interest but we were on the "roll it over and ignore" plan and I didn't pay that much attention to it.

Guess I need to start figuring out where to move it and how much DH and I can afford to start the auto-deposits with...