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Bump-Up CDs Explained
A bump-up CD lets you request one rate increase during the term if the bank's rates rise — protecting you from being locked into a below-market rate if conditions change, unlike a standard fixed-rate CD.
How Bump-Up CDs Work
You open the CD at the current rate, and at any point during the term you can request the bank apply their current, higher rate if one is available — typically limited to one bump per term.
Bump-Up CD Considerations
| Feature | Bump-Up CD | Standard CD |
|---|---|---|
| Starting rate | Often slightly lower | Standard market rate |
| Rate protection if rates rise | Yes, one bump allowed | No |
| Rate protection if rates fall | No | No (locked either way) |
When a Bump-Up CD Makes Sense
Best suited for savers who believe rates might rise during their CD term and want the option to capture that increase, accepting a modestly lower starting rate as the tradeoff.
Common Mistakes
Forgetting to actually request the bump — the rate increase isn't automatic in most cases, you typically need to actively contact the bank to apply it.
Frequently Asked Questions
Usually not — you typically need to actively request the bump from the bank when you notice rates have risen. It's not automatically applied, so check your account periodically if rates are trending upward.
Most bump-up CDs allow only one rate increase per term — confirm the specific limit with your bank before opening, since this varies by institution.