bank rates

Are Rising-Rate CDs Any Good?

Poll QuestionThe Wall Street Journal recently reported on “new rising-rate CDs” because, you know, they’re news.

Bankaholic readers have long been aware of this certificate of deposit variety, which allows you to bump up your rate once or more, should the bank raise the rate, during the term.

We even track a couple of nationally available CDs like these for our CD Rates Leaderboard.

CIT Bank has led terms with its Achiever CDs, and Ally has its Raise Your Rate CD.

And we do find decent rates for local deals every now and again with this feature.

But even though the Journal is late to the party, the article does make a couple of interesting points. First:

“But such CDs often come with drawbacks. While many banks will raise the rate on an existing CD if they roll out higher rates on other CDs, they won’t make this change automatically. Instead, customers in most cases will need to keep track of the bank’s rates and request the increase, which most don’t bother to do, says Dan Geller, executive vice president at Market Rates Insight.”

Um, this seems obvious in 2014, when personal service is, quite frankly, out the window. (Note to Geller: the bank also isn’t going to call you if you’re about to overdraw your checking account.)

Yes, you’ll need to keep an eye on your bank’s rates. And yes, it will take you about 10 seconds a day.

Second:

“Savers also should consider the possibility that banks won’t increase their rates in the near term. That means that someone who gets a one-year CD with a flexible yield may not be able to raise his or her rate. In addition, CDs that offer flexible rates often have steep early-withdrawal penalties.”

True, these types of CDs can be a gamble.

CIT Bank hasn’t raised the rates on its Achiever CDs in more than a year. But Ally has. Slightly.

Our thoughts: If the initial rate is Leaderboard-worthy, we’re not sure why you wouldn’t choose a CD that gives you the advantage of boosting your rate.

We are curious about whether or not readers have ever come out ahead on a rising-rate CD.

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Have you ever had the opportunity to raise the rate on a CD?
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