What is a Promotional (Bonus) CD Rate?
A promotional (bonus) CD rate is a certificate of deposit that offers a higher-than-normal annual percentage yield (APY). It is also known as a bonus or special CD.
These promotional CD rates are often offered to draw in new clients by the banks and credit unions. Although they could only be offered for a short period of time, some promos can be a great deal.
Promotional CD rates can be an excellent opportunity for savers to maximize their returns, but they often come with specific terms and conditions.
It is a good idea to always examine top CD rates when thinking about a promotional CD to evaluate how it stacks up against competitive market rates.
Pay special attention to the fact that when the CD is ready to mature, reassess the CD market because the promotional CD is unlikely to renew at this exceptional rate.
How a Promotional Certificate of Deposit (CD) Rate Terms Work
Promotional (bonus) CD rates have number of following things in common:
1. Irregular term lengths: Standard CD terms are 3 months, 6 months, 9 months, 1 year, 18 months, 2 years, 3 years, 4 years, and 5 years. Promotional CD rates offered by banks usually have irregular terms, which can be 7 months, 11 months, 13 months, 15 months, or 19 months. During this period, the depositor enjoys a higher interest rate than what is typically available.
2. The rate only applies to the initial term: For example, the bank may decide to renew an 11-month promotional CD as a one-year CD that earns whatever the one-year CD’s market rate is if you decide to roll it over. Before letting a CD renew itself, always read the fine print.
3. Higher minimum deposit: For their promotional CDs, banks frequently have higher minimum deposit requirements than for their regular CDs.
4. Higher rates on shorter terms: A bank may provide a promotional rate for a seven-month period that is greater than its regular rate for a five-year term, for instance.
5. No expiration date listed: Promotional rates usually do not have expiration dates like bank bonuses do, however some do.
Like all CDs, they offer the protection of Federal Deposit Insurance Corp. (FDIC) insurance of up to $250,000 per individual account at the bank and a minimum rate of return guarantee.
In the same way, the National Credit Union Administration (NCUA) offers share certificates, the credit union equivalent of CDs, up to the same amount, making them also low-risk.
The terms of a promotional CD rate can vary significantly between financial institutions. Some banks and credit unions may require you to open a checking account alongside the CD, while others might offer the promotional rate only to attract new customers.
It’s crucial to read the fine print and understand all the requirements before committing to a promotional CD.
What Happens to Your Promotional CD Rate During the Term of the CD?
Once you lock in a promotional CD rate, the interest rate remains fixed for the entire term of the CD. This means that regardless of fluctuations in the market interest rates, your promotional rate will not change. This stability can be advantageous in a declining interest rate environment, as you continue to earn the higher promotional rate.
However, it’s important to note that withdrawing funds from a CD before the term ends can result in penalties, which may include losing some or all of the interest earned. Therefore, it’s essential to ensure that you won’t need access to the funds during the CD term.
To earn more during a promotional CD term, some banks and credit unions offer step-up CDs that can offer a higher interest rate at certain point during the CD term.
What Happens to Your CD Interest Rate After the Promotional Period Ends?
Frequently, only the initial agreement term is eligible for the promotional CD rates. These promotional CD rates offered are usually higher so when the promotional period ends, the CD typically renews at the standard interest rate offered by the bank at that time.
The standard rate is usually lower than the promotional rate. Some banks automatically renew the CD for the same term, while others may offer different options. It’s important to be aware of the renewal terms and decide whether to keep the funds in the CD or explore other investment opportunities.
If you decide not to renew the CD, you can withdraw the funds without penalty during the grace period, which usually lasts a few days after the CD matures. This is an opportunity to reassess your financial goals and consider other investment options if the standard rate is not competitive.
Current Promotional CD Rates for 2025
As of 2025, several banks are offering attractive promotional CD rates. Here are some that stand out as of late April 2025:
| Bank & Promo CD | CD rate | Terms | Min. Deposit |
| NBKC Bank | 4.50% APY. | 7 month CD | $1000.00 |
| Consumers Credit Union | 4.25% APY. | 7-month CD | $1000.00 |
| NASA Federal Credit Union | 4.29% APY. | 9-month CD | $1000.00 |
| CIBC U.S. | 4.31% APY. | 9-month CD | $1000.00 |
| Bask Bank | 4.25% APY. | 9-month CD | $1000.00 |
| Marcus by Goldman Sachs | 4.30% APY. | 9-month CD | $500.00 |
| Service Credit Union | 4.25% APY. | 9-month CD | $500.00 |
| Sallie Mae Bank | 4.25% APY. | 11-month CD | $2,500.00 |
| NBKC Bank | 4.25% APY. | 11-month CD | $1000.00 |
| Synchrony Bank | 4.35% APY. | 13-month CD | No minimum deposit |
| CIBC U.S. | 4.06% APY. | 13-month CD | $1000.00 |
| Sallie Mae Bank | 4.40% APY. | 13-month CD | $2,500.00 |
| EverBank | 4.10% APY. | 13-month CD | $1000.00 |
| Marcus by Goldman Sachs | 4.40% APY. expires 5/28/25 | 14-month CD | $500.00 |
| Lending Club Bank | 4.10% APY. | 14-month CD | $500.00 |
| NASA Federal Credit Union | 4.09% APY. | 15-month CD | $1000.00 |
| Synchrony Bank | 4.25% APY. | 15-month CD | No minimum deposit |
| NASA Federal Credit Union | 4.04% APY. | 49-month CD | $1000.00 |
Key Points
- Promotional CDs frequently pay higher prices than regular CDs. The rate frequently only applies to the first term and not to subsequent ones, and they have irregular term lengths.
- Usually available for short-term CDs, promotional CD rates have a higher minimum investment requirement.
- Promotional CD rates offer higher interest rates for a limited time to attract new deposits.
- The promotional rate remains fixed during the CD term, providing stability against market fluctuations.
- After the promotional period, CDs typically renew at standard rates, which are usually lower.
- Verify if a promotional CD’s APY is actually competitive when compared to other CDs with comparable terms before opening it.
- The Federal Deposit Insurance Corporation (FDIC) insures bank certificates of deposit (CDs) up to $250,000.
Frequently Asked Questions
Q1: Can I withdraw my money from a promotional CD before it matures?
A1: Yes, but doing so may incur penalties, which can include losing some or all of the interest earned.
Q2: Are promotional CD rates available to existing customers?
A2: It depends on the bank. Some promotional rates are available to both new and existing customers, while others are exclusive to new customers.
Q3: How do I know if a promotional CD rate is a good deal?
A3: Compare the promotional rate to standard CD rates and consider the terms and conditions, including any requirements or penalties.
Q4: What happens if I don’t want to renew my CD after the promotional period?
A4: You can withdraw your funds during the grace period without penalty or choose to reinvest them elsewhere.
Q5: Are promotional CD rates insured?
A5: Yes, CDs are insured by the FDIC up to the applicable limits, providing a safe investment option.