How to Upgrade a Certificate of Deposit

Investing in a Certificate of Deposit is one of the best ways to keep your money safe while earning a competitive rate of interest. One drawback of a CD, however, is the fact that once you lock in your rate, you lose the opportunity to enjoy a higher rate later on. You can avoid this problem by choosing a CD that allows you to upgrade to a higher rate when interest rates go up.

• 1

  Review the paperwork you received when you originally purchased your CD from the bank. The terms and conditions page indicates whether or not the CD is eligible for an upgrade. Not all CDs can be upgraded.

• 2

  Check the interest rates offered on CDs by the same bank. Monitor the interest rates regularly to determine the optimal time to upgrade your CD. Most CDs can only be upgraded once, so you have to try and determine the best time to increase the interest rate on your CD. Keep an eye on the financial press to help predict the probable movement of interest rates. While there is no magic formula for determining the best time to upgrade your CD, rates tend to stay low during periods of economic decline, and begin to rise as the economy recovers and grows stronger. If you feel economic growth is just around the corner, it might be best to wait awhile in anticipation of higher rates.

• 3

  Visit the bank where you bought your CD. Bring the receipt from your original purchase with you, since it contains the account number and other information you will need.

• 4

  Complete the bank's paperwork to upgrade your CD. You will need to provide your name, address, phone number and the account number of the original CD. Get copies of the paperwork for your records.

• 5

  Review your next CD statement carefully to make sure you are receiving the new, higher rate. Contact the bank at once if there is a discrepancy.