Don’t Get Blindsided by High CD Rates – What to Know About CD “Specials”

Promotional offers or some may say “specials” for certificates of deposit (CDs) come with off-standard terms, generally higher rates, and often additional requirements. But before signing on for special CDs, it’s important to be diligent, read the fine print, and understand your agreement. This can help alleviate any surprises.  

CD “Special” Offers 

New Money 

As financial institutions try to bring in funds, they may offer higher CD rates for new money – money that has not been previously held in any account at their institution. This is a strategy some banks and credit unions use to appeal to new clients. These CDs aren’t necessarily available to current clients unless they deposit more (new) money.

Promotional Terms 

Financial institutions may offer promotional terms and rates that typically pay more and are anything outside of the standard 6-, 12-, 18-, and 24-month rates.

The drawback to a promotional rate is that once it matures, it will likely auto-renew to a standard CD term with a rate drastically lower than what was originally offered. To obtain a different rate, you can contact your financial institution within your 10-day maturity grace period after your CD matures to open a new CD with the rate and term that better match your needs.

Short Term  

Short-term CD rates (as low as 3 to 6 months) have been on the rise now that the Federal Reserve has forecast rates to drop in the coming months. This is an opportunity for those wanting to earn more at a higher rate. But CD Valet expert, Mary Grace Roske, notes that a short-term CD may auto-renew into a lower rate if not collected at maturity.  

Relationship Rate 

Another common offer is the relationship rate, which requires clients to open an additional account (i.e., checking or savings), deposit a certain amount, or have a loan with the same bank or credit union to receive the high CD rate. Carefully consider all these requirements when evaluating the rate.

Should I Avoid CD “Special” Offers? 

As you continue to see more offers like the ones above, be diligent in tracking CD terms and requirements, familiarizing yourself with your CD agreement, and reading the fine print. Most importantly, contact your financial institution before your CD matures to find out the rate and term of the auto-renewal. Even though financial institutions are required to notify customers about both items, they are not required to contact you with the new rate.  


How can I avoid falling for CD “specials”? 

To avoid being misled by CD “specials” carefully read the fine print, understand the terms, and be aware of any requirements or conditions associated with the offer. 

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