A certificate of deposit (CD) that gives the owner (holder) the right to increase (bump up) its yield one time over the tenure (term) of the CD. The owner is expected to exercise this right if prevailing interest rates increase (interest rate hike) at some point during the life of the CD. If, after exercising the bump-up right, interest rates decline, the new, higher rate on the CD cannot be changed (i.e., it remains the same). A bump-up CD protects the depositor (holder), up to an extent, from the interest rate risk inherent to standard CDs (vanilla CDs)

For example if a bank issues a certificate of deposit with a 4 year tenure with a bump up option, and a normal certificate of deposit with an interest rate higher by 20 basis points then a depositor must choose to hold the bump up certificate if only the interest rates rise more than a 20 basis points during that 4 year period.