Give the Brush-Off to Bump-Up CDs

There's a catch to CDs that let you take advantage of rising rates.

With certificates of deposit still paying minuscule yields, a CD that lets you take advantage of rising rates before it matures seems like a no-brainer. But, as always, there may be a catch. Most banks that offer so-called bump-up CDs restrict them to one or two longer maturities. Plus, many banks that sell these CDs restrict them to walk-in customers -- Internet savers need not apply.

Some banks make you jump through hoops to request the higher rate. At Dollar Bank, which has branches near Cleveland and Pittsburgh, you may bump up your rate to that of a higher-rate CD only if the maturity of the higher-rate CD exactly matches the length of time that remains on your CD. By contrast, Ally Bank, an online bank, lets you bump up the rate on its two-year Raise Your Rate CD at any time; the CD currently earns 1.5%, one of the better rates for that maturity.

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Senior Reporter, Kiplinger's Personal Finance