Don't forget that no interest will be be paid during the grace period after the Chase CD matures if you redeem the CD. So if you plan on closing the CD, it's best to close it on the day it matures. The grace period is 10 days after the CD matures. If you don't close the CD during the grace period, the CD will automatically renew for the same term at the standard interest rate (which is likely to be very low). This information was included in the letter that Chase sent to me a few weeks before the maturity date.
I'm going to miss that 5% CD. I certainly didn't think interest rates would be this low when I opened that 5% CD last year.
Checking or Savings Account with a CD
Having a checking account or a savings account at the institution where you have a CD can make it much easier to close a CD. In addition to Chase, I've been able to transfer the CD into my liquid account by a phone call at several banks and credit unions. Some even allow you to request the transfer online. Without the Chase checking account, I could have requested that they mail me the check which would have meant many days of zero interest and the worry of the check being lost in the mail. Also, I could have gone to a Chase branch and requested a check.
Convenience of ACH Transfers
Once the CD funds are moved into your checking account, you can then write a check for another CD. However, I've found it very convenient to use my Ally Bank savings account to pull the funds via an ACH transfer. This also works well when you have CDs at credit unions since you always have to maintain a savings account to retain your membership. When the CD matures, you can instruct the credit union to transfer the funds into your credit union savings account. Once it's in the savings account, you can use your online bank to transfer out the funds.
The only issue that I had with this method was at Navy FCU which does not allow ACH debits from its savings account. I had to open its money market account which allows ACH debits. So it's a good idea to do a test ACH withdrawal before the CD matures.
Ally Bank works well for ACH transfers. It has five important attributes:
- Transfers are free. Some banks charge for each transfer (or outbound transfer). Bank of America is an example of a bank that charges for outbound transfers
- Allows you to link external accounts online via trial deposits. Some online banks require you to mail in voided checks.
- No limit on the number of links to external accounts. Some only allow one link. ING Direct only allows 3.
- Allows large transfers. Some banks have limits as small as $2,000.
- Transfers are fast with little or no lost interest. In my case with Ally Bank, my transfer was completed in only one business day.
Refer to my weekly rate summary for the best nationwide savings accounts. In this list I include links to reviews with info on the banks' ACH transfer services.