Banks and credit unions are the most common places to open a CD

You can buy a certificate of deposit from any bank or credit union that offers them. Most national banks—including Chase, Bank of America, Wells Fargo, and Citibank—sell CDs. Your local or regional bank almost certainly does too. Credit unions, which are member-owned financial institutions, typically offer CDs as well, and often at rates competitive with or better than banks.

The main difference between a bank and a credit union is that credit unions are nonprofit and may offer better rates to members. You usually need to join a credit union to open an account there, though membership requirements vary widely—some are based on where you work or live, others on your employer or school affiliation. If you already have a checking or savings account somewhere, that institution can tell you whether they sell CDs and what rates they currently offer.

Key Takeaways

  • Banks, credit unions, and online banks all sell CDs, and rates vary significantly between institutions, so comparing before you buy is worth your time.
  • Online banks typically offer higher CD rates than brick-and-mortar banks because they have lower overhead costs.
  • All deposits up to $250,000 per depositor per institution are insured by the FDIC (at banks) or NCUA (at credit unions), so the safety of your money does not depend on which type of institution you choose.
  • You can buy a CD in person at a branch, by phone, or online, depending on the institution and the amount you want to deposit.
  • CD rates and terms change frequently, so the rate you see today may not be available next week.

Online banks often have the highest CD rates

Online banks—institutions that operate only on the internet with no physical branches—typically offer higher CD rates than traditional banks. This is because they have lower operating costs: no branch buildings to maintain, fewer employees, and lower overhead. That savings gets passed to customers in the form of better rates. Online banks like Marcus, Ally, American Express Personal Savings, and Discover all sell CDs.

The tradeoff is that you cannot walk into a branch to open an account or ask questions in person. Everything happens online or by phone. If you are comfortable managing money through a website or app and do not need face-to-face service, online banks are worth comparing. You still get the same FDIC insurance protection as you would at a traditional bank.

How to compare CD rates across institutions

CD rates change constantly—sometimes daily—so there is no single "best" rate. What matters is comparing the rates available to you right now, for the term length you want. Start by checking the websites of banks and credit unions you already use, then look at two or three online banks. Most institutions display their current CD rates on their homepage or in a rates section.

When you compare, look at the annual percentage yield (APY), not just the interest rate. APY tells you the actual return you will earn over a year, including how often interest is compounded. A CD with a 4.5% APY will earn you more than one with a 4.4% APY, all else equal. Also note the minimum deposit required—some CDs require $500, others $25,000 or more—and the term length (3 months, 6 months, 1 year, 5 years, and so on).

What you need to open a CD

To open a CD at any institution, you will need to provide your Social Security number, date of birth, and address. If you are opening an account at a new institution, they will also ask for an initial deposit—the amount varies by bank and CD term, but typically ranges from $500 to $2,500 for standard CDs. Some banks offer CDs with no minimum deposit, though these may have lower rates.

You can open a CD online, by phone, or in person at a branch. Online and phone applications usually take 10 to 15 minutes. You will need to fund the account by transferring money from another bank account or, at some institutions, by mailing a check. The CD will be issued once your deposit clears, which typically takes one to three business days.

FDIC and NCUA insurance protects your deposit

All deposits at FDIC-insured banks are protected up to $250,000 per depositor per institution. This means if the bank fails, your money is safe. Credit union deposits are insured the same way by the NCUA (National Credit Union Administration), also up to $250,000 per depositor per institution. This protection applies whether you buy a CD online or in person, and whether the institution is large or small.

If you are depositing more than $250,000, you can split it across multiple institutions to keep all of it insured. For example, you could open a $250,000 CD at Bank A and a $250,000 CD at Bank B, and both would be fully protected. The insurance covers the principal and accrued interest, so you do not lose money if the institution fails.

Brokered CDs are sold through investment firms

In addition to buying CDs directly from banks and credit unions, you can buy them through a brokerage firm like Fidelity, Charles Schwab, or Vanguard. These are called brokered CDs. The brokerage firm acts as a middleman, purchasing CDs from banks on your behalf. Brokered CDs sometimes offer rates that are not available if you buy directly from the bank.

The main advantage of brokered CDs is convenience if you already have an investment account at a brokerage. The main disadvantage is that brokered CDs can be more complex to understand, and if you need to cash out early, you may face a loss if interest rates have risen since you bought the CD. For most people, buying directly from a bank or credit union is simpler and more straightforward.

Frequently Asked Questions

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

Yes. You can open a CD as your first account at a bank or credit union. You do not need an existing checking or savings account. Some institutions may require a small minimum deposit to open the CD, typically $500 to $2,500.

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

You can withdraw your money early, but most CDs charge an early withdrawal penalty—usually a certain number of months of interest. For example, a 1-year CD might charge three months of interest if you withdraw early. The penalty amount varies by institution and term length, so ask before you buy.

Do online banks have the same insurance as traditional banks?

Yes. Online banks are FDIC-insured just like brick-and-mortar banks, up to $250,000 per depositor per institution. Your money is equally safe whether you buy a CD from an online bank or a bank with physical branches.

Can I buy a CD with money from another CD that is maturing?

Yes. When your CD matures, you can roll the money into a new CD at the same institution or move it to a different bank to take advantage of a better rate. Many banks will automatically roll your CD into a new one at the current rate if you do not tell them otherwise, so check your account before the maturity date if you want to shop around.

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

A high-yield CD is straightforward a CD with a higher interest rate than standard CDs at the same institution. The term "high-yield" is marketing language—there is no official definition. Online banks and some credit unions often offer what they call high-yield CDs because their rates are higher than traditional banks, but the product itself works the same way.