Where to buy a CD and what you need to open one

You can buy a CD at any bank or credit union that offers them. Most large national banks sell CDs, as do smaller regional banks and credit unions. You can also buy CDs through brokers and some investment firms, though the process differs slightly from buying directly at a bank.

To open a CD, you will need a government-issued ID, your Social Security number, and an initial deposit. The deposit amount varies by institution — some banks accept deposits as low as $500, while others require $1,000, $5,000, or more. A few banks offer no-minimum CDs, though these are less common. You will also need to decide on the term length (how long your money stays locked in) and whether you want the CD in your name alone or jointly with someone else.

Most banks let you open a CD online, by phone, or in person. Online opening is usually fastest and requires only a few minutes. If you open in person, bring your ID and be ready to fund the account immediately or arrange a transfer from another bank account.

Key Takeaways

  • You can open a CD at any bank, credit union, or brokerage that offers them, and most allow online applications that take less than ten minutes.
  • You will need a government ID, Social Security number, and an opening deposit that typically ranges from $500 to $5,000, depending on the bank.
  • Choose your term length (three months to five years or longer) before you apply, because changing it after opening usually means paying an early withdrawal penalty.
  • The interest rate is locked in when you open the CD, so compare rates across multiple banks before committing your money.
  • Your CD is insured up to $250,000 per depositor per bank through the FDIC (or NCUA at credit unions), so splitting large amounts across multiple institutions protects your full balance.

Comparing rates and terms before you commit

CD rates change daily and vary significantly between banks. A CD paying 4.50% at one bank might pay 3.75% at another, and that difference compounds over the term. Before you open any CD, check rates at five to ten banks using their websites or a rate comparison tool. Write down the rate, the term length, and any fees.

Term length is the other major choice. A three-month CD lets you access your money sooner, but pays a lower rate. A five-year CD locks in a higher rate but ties up your cash for sixty months. Most people choose one-year, two-year, or three-year terms as a middle ground. Some banks also offer non-standard terms like seven months or eighteen months — these sometimes pay better rates than the standard options.

Once you choose a bank and term, the rate is locked in. If rates rise after you open the CD, you cannot change it without paying an early withdrawal penalty (usually three to six months of interest). If rates fall, you keep the higher rate. This is why locking in a good rate matters — you are betting that current rates are worth the commitment.

Opening the CD online or in person

Online opening is the fastest route. Go to the bank's website, find the CD product page, and click the button to open one. You will enter your personal information (name, address, date of birth, Social Security number), choose your term and deposit amount, and review the terms. The bank will ask how you want to fund the CD — usually by transferring money from another bank account or by mailing a check.

If you transfer from another account, the bank will give you routing and account numbers to use. The transfer typically takes one to three business days. Some banks let you fund a CD immediately using a debit card, though this is less common. Once the money arrives, the CD opens and your rate is locked in.

If you open in person at a branch, bring your ID and be ready to provide your Social Security number and address. The banker will show you the available rates and terms, help you choose, and process the paperwork. You can usually fund the account on the spot by transferring from another bank account or by writing a check. The CD opens the same day or the next business day.

Understanding early withdrawal penalties and what happens at maturity

Every CD has an early withdrawal penalty — the cost of taking your money out before the term ends. Penalties are usually stated as a number of months of interest. A CD with a three-month penalty means you lose three months' worth of the interest you would have earned. On a $10,000 CD earning 4% annually, that penalty is roughly $10. On a $100,000 CD, it is roughly $100.

Some banks charge a flat dollar amount instead of months of interest, and a few charge a percentage of the principal. Read the CD's terms document before you open it so you know exactly what you will owe if you need the money early. If the penalty is steep and you think you might need access to the cash, consider a shorter-term CD or a high-yield savings account instead.

When your CD reaches maturity (the end of the term), the bank will contact you with options. You can withdraw the money, let it roll over into a new CD at the current rate, or move it elsewhere. Most banks automatically roll over CDs into new ones at the current rate if you do not respond by the maturity date. Check your email and mail around the maturity date so you can decide before the rollover happens.

FDIC insurance and protecting larger deposits

The Federal Deposit Insurance Corporation (FDIC) insures CDs up to $250,000 per depositor per bank. If the bank fails, you get your money back up to that limit. This protection is automatic — you do not need to do anything to activate it.

If you have more than $250,000 to invest in CDs, split the money across multiple banks to keep the full amount insured. For example, a $500,000 deposit could go into two banks ($250,000 each), and both would be fully protected. You can also open CDs in different ownership categories at the same bank — one in your name alone, one jointly with a spouse, one in a trust — and each category gets its own $250,000 protection. Ask the bank how they structure these categories if you are protecting a large balance.

Credit unions use the National Credit Union Administration (NCUA) for insurance instead of the FDIC, but the coverage is the same: $250,000 per member per credit union. The rules for splitting across institutions are identical.

Special CD types: bump-up, no-penalty, and brokered CDs

Most banks offer standard CDs, but some also offer variations. A bump-up CD lets you request one rate increase during the term if rates rise. This protects you if you lock in a rate and then rates jump — you can bump up to the new rate once. The trade-off is that bump-up CDs usually start at a slightly lower rate than standard CDs.

A no-penalty CD lets you withdraw your money early without paying a penalty. The catch is that no-penalty CDs pay lower rates than standard CDs — you are paying for the flexibility with lower interest. These make sense if you are uncertain whether you will need the money before maturity.

Brokered CDs are sold through investment brokers rather than directly by banks. The bank still issues the CD and FDIC insurance still applies, but the broker handles the transaction. Brokered CDs sometimes offer rates or terms that are hard to find at banks directly. The downside is that you may pay a commission or fee, and selling a brokered CD before maturity can be complicated because you have to sell it on the secondary market rather than simply withdrawing it.

After you open: tracking your CD and planning for maturity

Once your CD is open, you do not need to do anything until it matures. The interest accrues automatically and is added to your balance at maturity. You can check your balance anytime by logging into your bank account online or calling the bank.

Mark your maturity date on a calendar or set a phone reminder for two weeks before it arrives. Banks send maturity notices by mail or email, but these sometimes get lost or missed. If you do not respond by the maturity date, most banks automatically roll the CD into a new one at the current rate. If you want to withdraw the money or move it elsewhere, you need to contact the bank before the rollover happens.

When your CD matures, you have three options: withdraw the money, open a new CD at the current rate, or move the money to a different bank or account type. If rates have risen significantly since you opened the original CD, shopping around for a new CD at a different bank might pay better than rolling over at your current bank.

Frequently Asked Questions

Can I open a CD if I do not have a bank account?

Most banks require you to have an account with them to open a CD, though a few allow CD-only accounts. If you do not have a bank account anywhere, you will need to open one first. This usually takes five to ten minutes online and requires only an ID and Social Security number. Once the account is open, you can fund a CD immediately.

What happens if I need my money before the CD matures?

You can withdraw it, but you will pay the early withdrawal penalty stated in your CD's terms. The penalty is deducted from your balance, so you get back your principal minus the penalty and minus any interest lost. If the penalty is larger than the interest you have earned so far, you will get back less than you deposited.

Can I add money to a CD after I open it?

No. CDs are fixed-term, fixed-amount products. Once you open a CD with a specific deposit amount, you cannot add more money to it. If you want to invest additional funds, you would need to open a separate CD or use a savings account.

Do I have to pay taxes on CD interest?

Yes. CD interest is taxable income in the year it is earned or credited to your account, depending on how your bank handles it. The bank will send you a 1099-INT form at tax time showing the interest you earned. You report this on your tax return.

What is the difference between a CD and a high-yield savings account?

A CD locks your money in for a set term and pays a fixed rate. A high-yield savings account lets you withdraw anytime without penalty and the rate can change. CDs usually pay higher rates because you are committing to leave the money untouched. If you might need access to the cash, a savings account is more flexible, even if the rate is lower.