What Next After Promotional CD Matures?

I take advantage of CD promotions whenever and wherever I can — provided, of course, they offer attractive interest rates.

But when the CD matures, I risk getting a renewal rate that’s beyond terrible.

That’s because most promotional CDs provide that, at maturity, they renew into a standard CD of the same maturity, with the standard posted CD rate — not a promotional rate.

Sometimes, however, an institution offers me an incentive to stick around — even if it means paying a bit more than a new depositor would get.

For example, in 2008-09, I opened 12-month CDs at Union Bank having a promotional 3.15% APY.

At maturity, the bank permitted me to “negotiate” for new 12-month CDs with rates one-half to three-quarters of a percentage point above its regular 12-month rate.

(Unfortunately, when those new CDs matured, the bank was no longer interested in negotiating, so I ended up closing them.)

I had a disappointing experience last year when all my promotional 24-month CDs at First Republic Bank matured.

The bank, laser-focused on downsizing its deposit base and lowering its interest costs, offered me nothing but the standard, exceptionally low posted rates.

I still appreciate First Republic’s customer service, though, and give local branch personnel credit for directing existing depositors to other area banks offering far better CD rates.

More recently, I’ve been worried about two jumbo, 24-month, 2.25% APY promotional CDs I have maturing next month at Rabobank.

Were they to renew for another 24 months at the current standard rate (what they provide for), their APY would be a measly 0.47%.

When I inquired at my branch, however, I learned that any CD holder wishing to stay at the bank would be offered a 59-month extension at the current 2.25% APY.

A customer walking into the bank for the first time with the same amount of money would be offered 0.71% for opening a five-year CD.

What this shows me is that Rabobank is interested in developing long-term relationships with all customers, including depositors — and that it’s not just looking at its near-term financial results.

Great customer service (which I get at both First Republic and Rabobank) might be enough to keep some customers at a bank, but I need attractive CD rates most of all!

Now, if only Maine-based Androscoggin Bank, at which I have several promotional CDs maturing this spring, would follow Rabobank’s example!

I’ll find out soon enough.