Bump up CD
In deposit terminology, the term Bump-up CDs refers to a Certificate of Deposit that grants the holder the chance to raise the interest rate on the CD during the term of the instrument. Bump-up CDs usually only allow one bump up per term, and they offer a lower interest rate than comparable CDs without the Bump-up option.
For example, Bump-up CDs allow the holder the opportunity to increase the interest rate on the CD in the event of a rise in interest rates, subject to certain limitations imposed by the issuing bank.The Bump Up feature can help a depositor benefit from a significant rise in interest rates over the lifetime of the CD when the feature can be used. Nevertheless, any such perceived future benefit will need to be carefully weighted by the investor against the current loss of additional interest due to the initially lower interest rate on Bump-up CDs compared with that available with traditional CDs.