Bump-Up Certificate of Deposit - Bump-Up CD

It isn’t often that a bank cuts you a break when you've locked in an interest rate for a certificate of deposit (CD).

CDs guarantee an interest rate for a specific period of time, usually 1-5 years. However, with the increasingly popular bump-up CDs, if the market interest rates increase, you have an opportunity to increase that interest rate on your CD.

If the market rate goes down again after you've bumped up, you still keep the higher interest rate until the CD’s maturity date. Some financial institutions will even offer two bump-ups if the CD period is three years or longer.

The downside to bump-up CDs is that you start out with a lower interest rate than traditional CDs. You also need to roll the dice and guess when you should take the bump-up. Should you do it now, or wait to see if rates go even higher? Bump-up CDs also have a limited amount of time in which you can request the increase. Clock is ticking.