I'm earning more than 140 times as much on my savings now that I'm actively managing my money
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- My CD renewed at a disappointing 0.03%, so I set a reminder two months before it matured.
- I found a local bank that I trusted and found typical rates across different financial institutions.
- I was able to negotiate a rate I was very happy with by talking to my bank's financial advisor.
About two years ago, I forgot to check on my certificate of deposit. The maturation date came and went. As a result, my CD renewed at a much lower rate of 0.03%. A CD has been a beneficial savings tool for me because it can pay a higher interest rate than a savings account over a fixed period, but that was a disappointingly low rate.
I didn't want to pay a penalty fee by taking the money out of the account, so I waited until the account was near its maturation date, determined to keep a better eye on it. I put a note in my calendar and set up a digital alert to my email so I was notified about the renewal two months before my CD matured.
After finding a trustworthy, conveniently located bank, I researched trends in CDs from different sources to see how percentages and renewal rates compared across different financial institutions. Personal Finance Insider's monthly roundup of the best CD rates was a helpful tool to track average percentages and compare rates and terms.
I checked to see what other banks were offering. Many banks offer deals or bonuses to encourage new customers. Some of these deals cannot be found in online research. Visiting local banks helped me to see what hidden offers were available in my area.
A few family members had successfully negotiated terms for their CDs and gave me tips and strategies. For example, building a relationship with a financial advisor at your bank can help you keep track of your accounts and find new offers and deals more quickly. I contacted bank representatives to learn about what the most current rates were and what they could offer me.
I wanted to find the best offer for my long-term goals. Since I wanted the option to change my CD if interest rates rise, I decided that an 18-month term fit my needs. This would give me the flexibility to change banks or terms or add more of my savings to the CD in the near future.
I negotiated a competitive rate at my current bank
After all of my questions and research, my bank gave me a competitive 4.25% rate for an 18-month term. This was the highest rate I could find at the time. My long standing relationship with the bank made them willing to offer a better deal. It was a big difference from the 0.03% my CD automatically renewed at when it matured two years prior.
I learned that timely communication is a key strategy when negotiating terms on any financial account. It's helpful to communicate in person and in writing, to make sure that both you and your bank understand the terms you're agreeing to. It's best to ask questions at your local bank when you don't understand something. Most bank representatives are patient, knowledgeable, and enjoy connecting with their community. Building a rapport with bank representatives can lead to comfort and a wealth of financial knowledge.
Besides gaining a higher percentage on my account, I also learned more about the value of research when negotiating terms on an account. I check my CD monthly to track the interest it earns. I observe CD rates to see if I notice trends. When my CD's maturation date is approaching, I set a calendar alert to remind me to compare rates. While these strategies take time and effort, they provide value in the long run. I feel more confident managing my money and taking an active role in helping my savings grow.