Determining interest rates on a step up CD

Unlike the traditional certificate of deposits, in a Step up CD the rate of return increases after a specified period of time. Thus a step up CD can be described as a more improved version of a savings account. As in traditional CDs, purchasing Step up CDs ensure that you get a higher rate of return than your general savings bank accounts. In case you have purchased a 24 month step up CD, you can determine the interest rates on the on it very easily. The following instructions should be kept in mind while determining and calculating the total returns you will get.

Original document

It is important that you keep the original document of the CD when it was initially purchased. On getting a hold of the original document, the rest of the work can be made a lot easier. It is with the help of this original document, the breakdown of the step up schedule will be performed. That is the exact time from when your interest rates will grow higher resulting in higher return when the step up CD matures.

Reviewing the Original Document

Going through the original document of CD is important. This paperwork will be provided to you when you first purchase the CD. This paperwork will contain the exact time periods after which your interest rates will step up for a better return. Generally in case of a 24 month step up scheme, the interest rates increase 4 times in the entire period. The time period of each stepping up is 6 months. After each 6 months, the interest rates will increase by approximately half percent, resulting in a total 2 percent increase by the end of the entire time period. This cumulative stepping up will result in the final sum which you receive when the certificate of deposit finally matures.

Keeping a note of the dates

You should be very judicial in noting down the exact time periods after which your interest rate is likely to step up. A constant follow up of the interest rates is advisable. Suppose you are in the 6^th month of your 24 month step up CD scheme, and your interest rate stepped up on the 1^st of January. So the next step up in six months time on June 1 should be kept in mind. This helps in verifying whether your interest rates have actually stepped up or not. Doing this you can ensure that the process is on the right track to deliver you a hefty sum on maturity date.

Keeping a current copy of the Step up CD

It is important that you have the current copy of your CD statement. This is helpful in many ways. The current statement of the Step up CD has a record of all the specific details of your account that include your name, account number, the expiration date of the CD, the current balance and most importantly the current rate of interest that is being offered for your deposit.