3 Little-Known Perks of Buying CDs

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With interest rates dropping, certificates of deposit (CDs) can be a smart way to freeze them before they get too low. With some CD rates currently north of 4.00%, the headliner perk on today’s top-paying CDs is undoubtedly APY, APY, and APY. But don’t let earning interest obscure some of the lesser-known benefits of buying CDs. Growing your money is important, but these three perks could sweeten a CD contract.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. Ready to open a CD and earn extra cash? Click here for our list of the top-paying CDs to find one that fits your needs and get started today.1. Some CDs allow you to “bump-up” your rateStandard CDs offer a fixed rate for a specific period. For example, if you lock into a 4.00% APY, you’ll get 4.00% for the length of your term, whether that’s three months or five years.Locking in at a high rate can be glorious if CD rates fall. But if you lock your CD rate too early, the opposite could happen: You could watch CD rates across the board soar, while yours is still paying out at a lower APY.This is where a “bump-up” CD can come in handy.Bump-up CDs let you increase your rate at least one time during your term (some allow several bump-ups). This allows you to capture a higher APY after your term has started. Typically, bump-up CDs have lower initial rates than standard CDs. But they can prove useful in a fluctuating rate environment, especially if you think the CD provider will raise its rates.To be sure, I don’t think rates will be going up any time soon, which would make bump-up CDs with short terms, like six months, a poor choice. For CDs with long terms, like five years, it might not be a bad idea, since there’s no telling what will happen to CD rates that far into the future.2. You can access interest as you earn itWhile many CDs lock up your initial deposit for the length of your term, some will let you access the interest you’re earning along the way. Yes, even without penalty. Often, these CDs will even transfer the interest into a separate account, like a checking or savings account. Depending on your CDs terms, the interest could be deposited monthly, quarterly, semiannually, or annually.3. Brokered CDs can be sold on secondary marketsBrokered CDs are a little-known CD type. These CDs are available only through brokerage accounts, such as:FidelityCharles SchwabVanguardEdward JonesThe broker isn’t the CD issuer but rather buys CDs in bulk from providers, like banks, then sells them to its customers. Often, these CDs have higher APYs than what you’d find directly from a bank.Because the broker isn’t the CD issuer, it usually doesn’t let you withdraw from your CD — not even with an early withdrawal penalty. Instead, you have to sell your CD on a secondary market if you want out early. This involves finding a buyer who will take the CD off your hands.Selling a CD on the secondary market could result in a loss, especially if rates have increased since you purchased yours. But for savvy investors focused on the long term, taking advantage of today’s top-paying CDs could eventually result in a gain. If you load up on long-term CDs, you could turn a profit if rates hit rock bottom, not to mention earn high interest as you wait.Of course, like investing in stocks and other assets, trading CDs has risks. But it’s a strategy that many fixed-income investors simply don’t know about.All in all, CDs can offer investors more than just a high APY. Don’t get me wrong: Earning high interest on your savings is a major benefit. But dig a little deeper into your CD contract, as you might find some perks that surprise you.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Charles Schwab is an advertising partner of Motley Fool Money. The Motley Fool recommends Charles Schwab and recommends the following options: short December 2024 $67.50 calls on Charles Schwab. The Motley Fool has a disclosure policy.”}]] [[{“value”:”

With interest rates dropping, certificates of deposit (CDs) can be a smart way to freeze them before they get too low. With some CD rates currently north of 4.00%, the headliner perk on today’s top-paying CDs is undoubtedly APY, APY, and APY. But don’t let earning interest obscure some of the lesser-known benefits of buying CDs. Growing your money is important, but these three perks could sweeten a CD contract.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Ready to open a CD and earn extra cash? Click here for our list of the top-paying CDs to find one that fits your needs and get started today.

1. Some CDs allow you to “bump-up” your rate

Standard CDs offer a fixed rate for a specific period. For example, if you lock into a 4.00% APY, you’ll get 4.00% for the length of your term, whether that’s three months or five years.

Locking in at a high rate can be glorious if CD rates fall. But if you lock your CD rate too early, the opposite could happen: You could watch CD rates across the board soar, while yours is still paying out at a lower APY.

This is where a “bump-up” CD can come in handy.

Bump-up CDs let you increase your rate at least one time during your term (some allow several bump-ups). This allows you to capture a higher APY after your term has started. Typically, bump-up CDs have lower initial rates than standard CDs. But they can prove useful in a fluctuating rate environment, especially if you think the CD provider will raise its rates.

To be sure, I don’t think rates will be going up any time soon, which would make bump-up CDs with short terms, like six months, a poor choice. For CDs with long terms, like five years, it might not be a bad idea, since there’s no telling what will happen to CD rates that far into the future.

2. You can access interest as you earn it

While many CDs lock up your initial deposit for the length of your term, some will let you access the interest you’re earning along the way. Yes, even without penalty. Often, these CDs will even transfer the interest into a separate account, like a checking or savings account. Depending on your CDs terms, the interest could be deposited monthly, quarterly, semiannually, or annually.

3. Brokered CDs can be sold on secondary markets

Brokered CDs are a little-known CD type. These CDs are available only through brokerage accounts, such as:

FidelityCharles SchwabVanguardEdward Jones

The broker isn’t the CD issuer but rather buys CDs in bulk from providers, like banks, then sells them to its customers. Often, these CDs have higher APYs than what you’d find directly from a bank.

Because the broker isn’t the CD issuer, it usually doesn’t let you withdraw from your CD — not even with an early withdrawal penalty. Instead, you have to sell your CD on a secondary market if you want out early. This involves finding a buyer who will take the CD off your hands.

Selling a CD on the secondary market could result in a loss, especially if rates have increased since you purchased yours. But for savvy investors focused on the long term, taking advantage of today’s top-paying CDs could eventually result in a gain. If you load up on long-term CDs, you could turn a profit if rates hit rock bottom, not to mention earn high interest as you wait.

Of course, like investing in stocks and other assets, trading CDs has risks. But it’s a strategy that many fixed-income investors simply don’t know about.

All in all, CDs can offer investors more than just a high APY. Don’t get me wrong: Earning high interest on your savings is a major benefit. But dig a little deeper into your CD contract, as you might find some perks that surprise you.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.Charles Schwab is an advertising partner of Motley Fool Money. The Motley Fool recommends Charles Schwab and recommends the following options: short December 2024 $67.50 calls on Charles Schwab. The Motley Fool has a disclosure policy.

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