The CD secures the loan and both are at the same bank. That bank likely will not allow you to cash in the CD to move it, without paying off the loan. The loan may have a preferential rate which is based on them having that deposit account. |
In today's low rate environment you may not be able to place that CD in a new bank and receive the same rate of return you have now. That may tie into your decision.
Moving the CD and loan wouldn't be easy in the first place. The bank you want to move to would likely want the CD in place before they could give you a loan secured by it. Your old bank can charge you a penalty for cashing in the CD, and won't let it go unless the loan is repaid, so the catch 22 is that once you cash in the CD, and pay the penalty and loan, in full, you won't have that much to deposit in the new bank.
Published on BankingQuestions.com 2/14/08