CD Bump Up Terms: Can You Bump Up a CD’s Interest Rate? Introduction:
CD investments allow investors to make all of their dreams come true. CD investments have long been the choice for investors who want a safe, reliable way to invest their money. Investors who want to get the most out of their money opt for as many options as possible with their CDs. Bump up options are one of the CD types that offer a bit more flexibility than a traditional CD does. Bump up CDs offer investors the opportunity to raise their rates when the current CD rates increase. Most banks only offer one bump up per term, but some offer more than one, depending on the terms. The option to bump up the CD rates offers investors the option to make more money on their investments.
How to Know if Your Certificate of Deposit CD Has a Bump Rate
The Bump up options should be discussed during the time the accounts are opened. Bump up CDs are different from traditional CDs, so if the option is not discussed when the accounts are opened, investors should assume that they have traditional CDs instead of bump up CDs.
Another thing that investors should check is the paperwork for their CDs. When investors open CD accounts, all of the terms and conditions are stated in the paperwork. Before signing an agreement in person or agreeing to terms online, investors must carefully read the paperwork—especially the fine print. The fine print may contain special conditions and clauses that may be very different from the terms discusses with those at financial institutions. Investors should know what they are signing up for before agreeing to the terms.
How to Take Advantage of the Bump Up and Get Your Certificate of Deposit CD Interest Rate Increased
- Make sure that the bump up option is available for the CDs. This is information that investors should know in advance. Knowing this information in advance can help investors decide the best way to use the bump up. Planning is the key to getting the best terms at the best time.
- Investors must make a request for the bump up rate. Issuers do not just automatically adjust interest rates when the current rates increase. They also do not contact investors to make sure that they use their bump up before the terms of their CDs expire. Investors must contact the financial institution directly to request the bump up rate. Issuers may take several months to bump up the interest rate so timing is everything. Larger financial institutions may take less time to provide investors with their bump up request.
- Determine the number of bump ups allowed by the financial institutions. Most banks only offer one bump up request, but others allow more than one. The ability to use more than one bump up depends on the terms of the CDs. CDs with longer terms may offer the option to use more than one bump up. Taking advantage of this option may help investors earn a greater amount of money over the terms of their CDs. Although finding financial institutions with more than one bump up rate is rare, they are available. Investors just have to do their research to find these financial institutions.
- Determine the time that the bump up option can be used. Bump up options are very enticing, but they come with criteria for their use. Financial institutions may only allow investors to use their bump up option at certain times at certain frequencies. For example, investors may only have the option to use the bump up once in a 12-month period, and they may only have a small window of time that they may use the bump up during the 12-month period.
Investors must be very careful when using their bump up. If they use it too soon, they may not benefit from future interest rate increases. Additionally, investors should make note that if the current interest rates do not increase, they do not get to use their bump up option. The bump up option may go to waste. Sometimes investors get lower interest rates on CDs with the bump up option so they may also lose money in the process.
Bump up options are wonderful opportunities to make more money on investments when interest rates increase. Interest rates are very uncertain, but it is a good idea to have the option to benefit from interest rate increases. Investors must remember to request their bump up option or bump up options in order to receive their rate increases.
Keep reading to learn more about other important CD terms you need to consider when investing.