3 Little-Known Perks of Buying CDs

Motley Fool11-15

KEY POINTSSome CDs let you "bump-up" your CD rate, allowing you to capture a higher APY if rates move upward.Many CDs will let you access the interest you earn during the term, even if the initial ...

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But if all you know about CDs is the high APYs, here are three perks that may surprise you.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","BK4516":"特朗普概念","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","LU0130103400.USD":"Natixis Harris Associates Global Equity RA USD","BK4585":"ETF&股票定投概念","LU0477156797.USD":"HARRIS ASSOCIATES GLOBAL EQUITY \"RE\" (USD) ACC","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","LU2360107671.USD":"BGF FINTECH \"A4\" (USD) INC","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","LU1861220207.SGD":"Blackrock FinTech A2 SGD-H","LU0211331839.USD":"FRANKLIN MUTUAL GLB DISCOVERY \"A\" (USD) ACC","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","CD":"秦淮数据","LU1861217088.USD":"贝莱德金融科技A2","COF":"第一资本","LU0130518102.USD":"HARRIS ASSOCIATES GLOBAL EQUITY \"R\" INC","BK4116":"互联网服务与基础架构","BK4166":"消费信贷","LU0648000940.SGD":"Natixis Harris Associates Global Equity RA SGD","BK4588":"碎股","LU1201861165.SGD":"Natixis Harris Associates Global Equity PA SGD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元"},"translate_title":"购买CD的3个鲜为人知的好处","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CD":0.9,"COF":0.9,"US7Y.BOND":0.67,"US10Y.BOND":0.67,"US12M.BOND":0.67,"US2Y.BOND":0.67,"US30Y.BOND":0.67,"US3Y.BOND":0.67,"US5Y.BOND":0.67,"US6M.BOND":0.67},"content_text":"KEY POINTSSome CDs let you \"bump-up\" your CD rate, allowing you to capture a higher APY if rates move upward.Many CDs will let you access the interest you earn during the term, even if the initial deposit is locked up.Brokered CDs offer a spin on the traditional CD, by letting you trade it on secondary markets.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.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.Our Picks for the Best High-Yield Savings Accounts of 2024American Express® High Yield SavingsAPY4.00%                        Rate info                Circle with letter I in it.      4.00% annual percentage yield as of November 15, 2024      Min. to earn$0Open Account for American Express® High Yield SavingsOn                          American Express's             Secure Website.                                                  Member FDIC.                                              APY4.00%                        Rate info                Circle with letter I in it.      4.00% annual percentage yield as of November 15, 2024      Min. to earn$0Capital One 360 Performance SavingsAPY4.00%                        Rate info                Circle with letter I in it.      See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Oct. 23, 2024. Rates are subject to change at any time before or after account opening.      Min. to earn$0Open Account for Capital One 360 Performance SavingsOn                          Capital One's             Secure Website.                                                  Member FDIC.                                              APY4.00%                        Rate info                Circle with letter I in it.      See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Oct. 23, 2024. Rates are subject to change at any time before or after account opening.      Min. to earn$0CIT Platinum SavingsAPY4.55% APY for balances of $5,000 or more                        Rate info                Circle with letter I in it.      4.55% APY for balances of $5,000 or more; otherwise, 0.25% APY      Min. to earn$100 to open account, $5,000 for max APYOpen Account for CIT Platinum SavingsOn                          CIT's             Secure Website.                                                  Member FDIC.                                              APY4.55% APY for balances of $5,000 or more                        Rate info                Circle with letter I in it.      4.55% APY for balances of $5,000 or more; otherwise, 0.25% APY      Min. to earn$100 to open account, $5,000 for max APYThis 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.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2483370970"}