Some offers on this page are from advertisers who pay us, which may affect which products we write about, but not our recommendations. See our Advertiser Disclosure . What is a step-up CD, and how does it work? The interest rates on step-up CDs increase over time but they may not be worth it compared to other accounts. Sarah C. Brady Contributor Tue, September 8, 2026 at 11:49 AM PDT 4 min read Opening a CD usually means locking in a fixed interest rate for the entire term. With a step-up CD, on the other hand, the rate automatically increases at predetermined intervals, giving you the opportunity to earn more as time goes on. And while that might sound like an obvious benefit, step-up CDs come with a few trade-offs to consider before opening one. How do step-up CDs work? Step-up CDs have predetermined rate increases that kick in at set intervals. You can typically expect the rate on a step-up CD to start at around 0.05%, increase by up to 0.20% every seven to 10 months, and mature within 30 months. If you want to compare rates between step-up CDs and traditional CDs, look at the "composite APY" or "blended APY" on the step-up CD. This figure shows you the average rate you'll earn if you leave your money in the account until it matures. Right now, step-up composite rates range from 0.10% to 0.35% APY. That's considerably lower than today's best CD rates , which hover around 4% APY. As if that isn't enough reason to pass on step-up CDs, consider that some of these accounts are callable. That means the bank can close the account before it matures and then give you back your deposit and interest. A callable CD is most likely to be closed if market rates fall below what you're earning on the account. Step-up CDs vs. bump-up CDs Like step-up CDs, bump-up CD rates can increase. However, step-up rates adjust multiple times while bump-up rates usually increase just once, and only if the issuing bank raises its available rates. If that happens, you have to request an adjustment from the issuer. As the investor, that means you'll need to try and time the market to ensure you get the biggest increase possible. Both types of CDs are difficult to find, and both offer lower rates than traditional CDs. However, bump-up CD rates tend to be more competitive than step-up CD rates. Where can I find a step-up CD? Step-up CDs are not common. Here are a few examples of step-up CDs available today: Citibank Step Up CD : This 30-month CD has a $500 minimum deposit, starts at a rate of 0.05% and adjusts up to a high of 0.15%. US Bank Step Up CD : Rates increase every seven months on this 28-month CD, and you'll earn a composite rate of 0.35% APY. SouthPoint Financial Credit Union : Terms of 24 and 36 month are available with a $1,000 minimum opening deposit....
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