Can you lose money on a callable CD?

It depends. If you hold a CD that the bank calls because interest rates have dropped, you get to keep all of the interest you’ve accrued plus the principal. In this scenario, you won’t lose any money, but you’ll have to figure out where to reinvest your money, which could be in a new CD that offers a lower APY. If you have a brokered CD with a call provision and want to get out of it before the CD reaches maturity, you’ll have to sell it. Depending on if interest rates have risen or fallen since you purchased the CD, you could incur a profit or loss on your sale. For example, if you locked in a 4% APY on a CD but APYs have dropped to 3%, you’ll likely earn money when you sell it because that 4% APY is more attractive now.

Should you buy a callable CD?

It depends. If you’re fine with the possibility of your CD getting called and want a higher APY, it could be a good bet. On the other hand, if you don’t want to deal with the hassle of figuring out how to reinvest your money if it does it get called, a traditional CD is a better choice.

Home
Personal Finance
Education
Business Solutions
Shopping

We have independently evaluated the products and services below. We may earn affiliate revenue from links in the content.

Home Page

Personal Finance

Credit Cards
Banking

Savings

Best Savings Accounts
Best High-Yield Savings Accounts
What is a High-Yield Savings Account?
Savings Calculator

CDs

Best CD Rates
Current CD rates
1-Year CD Rates

Best Money Market Accounts
Best Cash Advance Apps
Free Checking Accounts
Checking Account Bonuses
Online Banks & Credit Unions
Business Checking Accounts
Budgeting Apps

Insurance

Jewelry Insurance
Small Business Insurance Companies

Mortgages

Home Equity Loan Rates

Investing

Investments
Online Brokerages
Investment Apps
Cryptocurrency Apps & Exchanges
Roth IRAs
Robo-Advisors

Loans

Best Credit Repair Companies
Best Debt Relief Companies
Personal Loans
Buy-Now, Pay-Later Apps

Education

Business
Tech
Health & wellness

Business Solutions

VoIP
CRM
Payroll
Web Hosting

Shopping

Shopping Guides

Go to Fortune.com

BANKING

PERSONAL FINANCE
BANKING
WHAT IS A CALLABLE CD?

What is a callable CD? What to know about the risks