Before finding out how you can cash a certificate of deposit, you first need to know what a “Certificate of Deposit” or more popularly known as a CD is. What is it really? How does it work for you? Is it a wise thing to do when you are thinking of investing? Certificate of deposits are actually like savings accounts in banks. They are considered to be very safe investments and are insured by a bank and totally risk-free. The only difference between a CD and a savings account in the bank is that a CD has a fixed term that varies starting from 3 months and anytime up to 5 years and it has a fixed interest rate.
Normally a CD will have a higher interest rate than your regular savings account because it is going to have a fixed term. You are not allowed to withdraw your CD until it has matured. Your CD together with the accrued interest will be withdrawn together at the time of maturity. So that is how a CD works. Now, on to how you can cash a certificate of deposit? Just follow the steps below so you can easily cash in your certificate of deposit.
- Be aware of your CD’s maturity date. If the maturity date is nearing watch out for a letter that your banking institution or any other financial institution will send you regarding the maturation of your CD. In the letter they will present you with your options regarding your about-to-mature CD. If you will do nothing when the time of your CD’s maturity comes, your financial institution will roll your CD again with the same terms where you first got them.
- Bring all necessary documents when you are cashing out your CD. Take with you to the bank the original certificate you received when you invested in the CD. Also bring a photo ID. You must do this within the time set by your bank otherwise you won’t be able to cash in your CD without some penalties. Take note of deadlines and be careful to prevent penalties.
- When you get to the bank, ask to be directed to somebody who handles CDs. The employee that handles CDs will explain to you the many options you have. You can reinvest it or maybe open a savings account and deposit your cash out or just close your CD and cash out all monies and go home with them. Ask the employee to explain all the pros and cons of your options so you can decide wisely on the matter.
- When you have decided to completely cash out your CD. Get all the necessary paperwork signed and done and once this is done, you might be given a check that you can cash out with their cashier or maybe even handed the cash right away. Cash out your check with their cashier or place your already cashed out money inside an envelope and make sure you place it in a safe parcel inside your bag.
There you have it. The procedure is quite easy. You just need to be aware of deadlines and talk to a person who handles CDs and ask lots of questions if some things are not clear with you. It doesn’t hurt to ask.