Bump-Up CDs: Discover How This Savings Strategy Works and …

Sep 15, 2023 · A Bump-Up CD is a special type of deposit account that lets you take advantage of rising interest rates by “bumping up” the APY on your account. ... Bump-Up CDs: Discover How This Savings Strategy Works and Whether It’s Right for You. A bump-CD gives you the option …

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FAQs about Bump-Up CDs: Discover How This Savings Strategy Works and … Coupon?

Why should you buy a bump-up CD?

Lets you take advantage of rising rates: The bump-up CD allows you to take advantage of rising rates. You buy a bump-up CD expecting interest rates to go up. If rates increase, you can bump up the interest rate to the current higher rate and earn more money. ...

Can you bump up a CD?

Typically, one bump up is allowed, and the other terms of the CD remain the same after that. The initial interest rate of a bump-up CD is lower than other types of CDs, but it comes with the potential opportunity to earn a higher rate. ...

How do bump-up CDs work?

One thing to keep in mind is that CDs aren’t all the same. Bump-up CDs are a specific type of savings option that could help you increase the annual percentage yield you earn over time. This type of CD can be useful in a changing interest rate environment. Here’s a closer look at how bump-up CDs work and what to know about using them to save money. ...

Should I open a bump-up CD?

Opening a bump-up CD can allow you to take advantage of upward movements where interest rates are concerned. With most CDs, your APY is locked in for the entire term. But opening a bump-up CD allows you to take advantage of higher rates without having to wait for your CD to mature. ...

Should you buy a bump-up CD if interest rates increase?

A bump-up CD can offer unique perks to savers if interest rates increase during the CD term. the_burtons/Getty Images After numerous Fed rate hikes over the last year, borrowers are now paying a lot more to finance their purchases. ...

Should you get a bump-up or step-up CD?

U.S. Bank (see our U.S. Bank review). The main purpose of getting a bump-up or step-up CD is to reduce a common risk that traditional CDs have: missing out on higher future rates once you lock in a CD. But you can avoid that risk through a strategy called a CD ladder. ...