Bump-Up Certificate of Deposit (Bump-Up CD)

A bump-up certificate of deposit is a type of CD that lets you request a higher interest rate at least once during the term if your bank raises rates for that same CD product. Unlike a traditional CD that locks in a fixed rate for the entire term, a bump-up CD gives you the option to capture better rates without closing the account or paying an early withdrawal penalty. Most bump-up CDs have two- to three-year terms and restrict you to one rate increase per term. They are also called raise-your-rate CDs and bump-rate CDs.

Think of a bump-up CD like a gym membership with a price match guarantee: you locked in a rate, but if better terms become available once, you can claim them without starting over.

You Pay for the Flexibility with a Lower Starting Rate

Banks offer bump-up CDs with lower initial rates than comparable traditional CDs. The bank is accepting the risk that you will exercise your bump during a rising rate environment and owe you more interest for the remainder of the term. If a two-year traditional CD pays 4.0% and a two-year bump-up CD pays 3.5%, you are paying 50 basis points for the option to adjust once.

The bump-up feature only adds value if rates actually rise enough to overcome that starting disadvantage. In a falling or flat rate environment, the bump-up CD will underperform a traditional CD at the same institution with the same term. Bankrate data as of 2025 shows top traditional CD rates near 4.25%, while bump-up equivalents typically start lower.

You Must Monitor Rates and Request the Increase Yourself

Banks do not automatically update your rate when they raise rates for new CDs. You must track the market, identify when it makes sense to bump, and actively contact your bank to request the increase. This requires engagement that traditional CD holders never need.

The timing judgment is genuinely difficult. If rates are still climbing, waiting may let you lock in a higher eventual peak. If you bump early and rates continue rising, you are stuck at the intermediate rate until maturity. With only one adjustment per term, getting the timing right matters.

Banks Offering Bump-Up CDs Include Ally, Marcus, and Synchrony

Not every bank offers bump-up CDs. Among those that do, Ally Bank, Marcus by Goldman Sachs, Synchrony Bank, Andrews Federal Credit Union, and First Tech Federal Credit Union are commonly available options. Terms, minimum deposit requirements, and the number of permitted bumps vary across institutions.

Like all certificates of deposit at FDIC-insured banks, funds are protected up to $250,000 per depositor per institution. The bump-up feature does not affect deposit insurance coverage or the early withdrawal penalty if you need your money before maturity.

Sources:
https://www.bankrate.com/banking/cds/bump-up-cd/
https://www.nerdwallet.com/banking/learn/bump-up-cd-step-up-cd
https://www.raisin.com/en-us/banking/bump-up-cd/
https://www.synchrony.com/blog/bank/how-bump-up-cds-work