As your CD approaches maturity, thinking forward to your future financial needs can help determine if renewal is right for you.
"Certificates of deposit are a time deposit," says Greg McBride, CFA, Bankrate senior financial analyst. "Before you commit the money for that length of time, you have to be reasonably certain that you can live without the money for the entire term."
McBride says that making that determination involves revisiting the reason you initially invested in the CD or reassessing your current cash needs.
If your CD still has time to reach maturity, you can get a head start on answering the renewal question. Colleen O'Brien, vice president and branch manager of Charles Schwab & Co. in San Ramon, Calif., says that evaluating your financial situation on a regular basis is important because needs and goals often can change.
"The best place to start is with a third party to talk about your current and future goals," O'Brien says.
If you do not have a personal financial adviser, an investment goals calculator can help you understand how long it will take to reach your goal with your CD's renewal rate.