What Are Bump-Up CDs and Which Banks Offer Them?

Most certificates of deposit (CDs) lock in a fixed annual percentage yield (APY) for the entire term, but a variation known as a bump-up CD allows account holders to request a rate increase before the CD matures, CNBC reported.

According to CNBC, bump-up CDs give savers the option to raise their rate if the issuing bank increases the APY it offers on that product during the CD's term. This differs from standard CDs, where the rate remains fixed regardless of market changes, and from variable-rate CDs, which adjust automatically based on market conditions.

CNBC's report noted that bump-up CDs are less common than traditional fixed-rate CDs and are offered by a limited number of financial institutions. The report did not specify a comprehensive list of banks but indicated that such products are available among select banks that offer alternatives to standard CD structures.

The appeal of a bump-up CD, per the report, is that it offers a hedge against rising interest rates: if rates climb after a saver opens the CD, they typically have the option—often limited to once or twice during the term—to request the higher rate rather than being stuck with the original APY.

However, CNBC noted that bump-up CDs often start with a lower initial APY compared to standard fixed-rate CDs, reflecting the added flexibility they offer. Savers considering this option are advised to compare the starting rates, the number of allowed rate increases, and overall terms across different banks before opening an account.