How can CD holders benefit from rising interest rates?

By TS Bank
Published: Jun 30, 2017 9:23:28 AM

As you may have heard in the news, the Fed has raised rates multiple times over the last few months. According to the Omaha World-Herald, this was due to “increasingly solid economic footing.”

The Omaha World-Herald reached out to Neil Stanley, president of community banking for his comments on the topic and how it affects CD rates.

Excerpt from the June article:
“We still have people remembering a waiting line of CD customers wanting to trade out of their old ones,” said Neil Stanley, president of community banking at TS Bank, based in Treynor, Iowa. “That happened in the ’80s, but we’ve had 30 years during which that made no sense,” as interest rates have fallen and more investors have plowed into the stock market and elsewhere to chase returns.

TS Bank is again seeing interest from CD holders who wish to do something about their current CD rate. Contrary to the popular belief that you have to wait until maturity to get higher interest rates, CD interest rates rising allows depositors opportunities to make more money on their existing CDs by taking action before maturity.

How do I upgrade my current CD?
If you currently hold a certificate of deposit at a financial institution, you could have a unique opportunity to upgrade your CD in this new rate environment. Similar to how homeowners refinance their mortgages when interest rates decrease, CD holders can refinance their old contracts for new ones as interest rates increase. The best approach is to open a new contract that matures on the same date as the original contract. This approach eliminates any risk to the depositor as you can choose between old or new based on which one gives you the most money at the same future maturity date. Even after paying a penalty you could be like many others today who come out ahead! 

How do I know if I can get a better CD rate?
Call your local community banker and let them know you want to upgrade your current CD in this new rate environment. You and your loved ones could be wasting thousands of dollars by waiting until your maturity date. It costs you nothing to run the numbers.

Questions about CDs or how to refinance your current CD? Call TS Bank at 844-487-3030.

*Not all certificates of deposit will qualify. Fees may reduce earnings. Penalty for early withdrawal. Minimum deposit may be required. Personal accounts only.

Written by TS Bank