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How to decide whether a holiday CD rate special is for you

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Special offers around the holidays are everywhere.There are Black Friday deals, Cyber Monday campaigns and other special offers from all kinds of companies. Every now and then, even banks offer special rates on their certificates of deposit (CDs) that coincide with the holiday season. These special rates may be competitive or even higher than a regular CD’s annual percentage yield (APY).

While these holiday CD rate specials won’t make you rich, they can help you make some extra money without taking on risk.

What is a holiday CD special?

A holiday CD special is a CD with a special APY for a limited time during the holidays. Banks and credit unions offer them.

Holiday CD rates can be a great way for consumers to get a deal on a CD. But financial institutions usually won’t offer a higher rate on a CD just because it’s the holiday season — they are running specials because they need deposits for their business needs, such as current and future loan demand.

“In today’s world, I do think it’s really more driven by a bank’s need for deposits, to be able to loan back out or to match up with their loan demand,” says Rose Oswald Poels, president and CEO for the Wisconsin Bankers Association.

Banks may be offering these special rates to load up on deposits for 2020.

How do you find a holiday CD special?

Check your bank’s or credit union’s website to see if it offers a holiday CD rate. Even if the CD doesn’t have holiday in its name, the financial institution may still offer a special CD rate and it might be a good deal. Just make sure you compare it to other CD rates to make sure it’s really a deal.

If you don’t see a promotional rate, you can always ask your banker if there is a special.

It may be difficult to find holiday CD rate specials. If you can’t find one, compare regular CD terms to find the best option for you.

How much higher are these rates usually?

These special rates may be competitive or even higher than regular CD APYs. You can’t assume one way or the other, so always compare holiday CDs and special CDs to CDs with regular APYs.

Standard CD terms are a one-year CD, two-year CD, three-year CD, four-year CD and a five-year CD. An 18-month CD, and some other terms, might also be considered normal.

But holiday CDs or special CD rates tend to have non-typical terms.

For example,  Advia Credit Union is offering 2.25 percent APY on its holiday CDs. These come in terms of five months, 10 months or 25 months.

Recently, Oswald Poels says she came across a new CD rate special offering a seven-month term.

“So, it may not always be what you think of as a traditional CD term of like 12 months or 24 months,” she says.

[COMPARE: Best CD rates]

Are there any catches?

New money might be necessary 

The bank is likely running this special in order to attract new deposits. New deposits, or a new money requirement, is typical for certain bank specials. This requirement means that the money that you are using to open the CD has to come from outside of the bank that you’re getting this special rate at.

For instance, First Midwest Bank defines new money as funds that aren’t on deposit at its bank and money that hasn’t been in one of its accounts for 90 days prior to opening an account.

CD rate specials don’t last forever 

Typically, CD rate specials are only available for a limited time. Sometimes, but not always, the bank will let you know how long the rate is valid.

Find out what happens when the CD matures. See if it will renew for the same term or a different term. It’s always a good idea to evaluate your CD and compare it to other options.

You will usually have around a 10-day-grace period to renew your CD or withdraw your money penalty-free. But some banks may have a shorter grace period.

Don’t just compare CDs with the same terms

Special CD rates make it a little more difficult to compare apples to apples. For instance, it might make sense to compare a 10-month holiday CD with a one-year CD because you’re likely to find fewer 10-month offerings.

As long as the extra two months won’t factor into your decision, this will help you cast a wider net to find the best CD for you.

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Written by
Matthew Goldberg
Consumer banking reporter
Matthew Goldberg is a consumer banking reporter at Bankrate. Matthew has been in financial services for more than a decade, in banking and insurance.
Edited by
Banking editor