The offers on this page are from advertisers who pay us. That may influence which products we write about, but it does not affect what we write about them. Here's an explanation of how we make money and our Advertiser Disclosure.
How to open a CD account in 5 simple steps
Want to earn more interest on your savings? If so, a certificate of deposit (CD) is worth considering.
Although the rates on these accounts aren't ultra-high, they typically beat traditional checking and savings accounts. For example, while the national average rate for savings accounts is a measly 0.45% APY, the rate on one-year CDs is 1.81%, according to the FDIC.
These low-risk deposit accounts are available through most banks and credit unions, and they usually take just a few minutes to open. Here's how to open a CD account.
1. Determine how much to deposit
Most CDs have minimum deposit requirements, so you'll want to start by figuring out how much money you can deposit.
There's no magic number for how much cash you should put in a CD, but there are helpful guidelines you can follow. In general, you'll want to deposit money you don't need right away but you do plan to use it for a specific expense in the next year or two. Here are some examples:
-
Vacation
-
Wedding
-
Down payment on a car or home
-
Self-employment taxes
-
Property taxes
-
Home repairs
A CD is not a good place to deposit your emergency savings or money you need for day-to-day spending, since you'll face penalties if you need to make an early withdrawal. It's also a bad place to keep your long-term savings since you can earn more interest by putting the funds into a retirement account or other investments.
Read more: What's the typical minimum balance for a certificate of deposit (CD)?
2. Choose a CD type and term
A CD’s term refers to the amount of time you're required to leave your money on deposit. If you withdraw the money before the term is up, you usually face a penalty.
There's a wide range of CD terms available, from three months to 10 years or more. Usually, choosing a longer term means earning a higher interest rate, though the opposite can be true when the Federal Reserve is expected to reduce interest rates (which is likely in 2025).
Ultimately, the best term length for you depends on current interest rates and when you need the money.
As for the type of CD, there are many options. For most people, a traditional fixed-rate CD is the best choice. If you want more flexibility, you might choose a different type of CD — such as an add-on CD or bump-up CD — but the trade-off for flexibility is usually a lower interest rate.
Read more: 10 types of CDs: Which one is right for you?
3. Compare available CDs
Once you know how much money you'll deposit and for how long, you can find the best available account for you. The perks and features vary from one CD to the next, but here's what you should look for:
-
Insurance: Deposit insurance is a must-have for your bank accounts, including your CDs. Be sure to choose a bank that’s insured by the FDIC (or the NCUA if you’re opening a CD with a credit union). This ensures up to $250,000 of your deposits are protected if the institution fails.
-
Competitive interest rate: A CD’s annual percentage yield (APY) represents the interest you earn on the account over the course of a year. The higher the APY, the more you earn.
-
Affordable opening deposit: There are CDs with no minimum deposit requirement, while some could require as much as $100,000. Look for a CD account with a minimum deposit you can easily meet.
-
Eligibility for membership: Credit unions often provide higher APYs than banks, but they require you to become a member in order to open an account. To join, you usually have to submit a short membership application as part of your CD application. With any new bank or credit union, you may also have to open a checking or savings account and make a small deposit.
Read more: 7 credit unions anyone can join
4. Apply for an account
You can usually submit a CD application online, in person, or over the phone. If you apply online through your existing bank or credit union’s website, the process should just take a few clicks.
To apply at a new financial institution, you'll need to provide some or all of the following details:
-
Your choice of CD
-
Deposit amount
-
Your name
-
Contact information
-
Proof of address
-
Government-issued ID
-
Social Security number or ITIN
-
Choice of how you wish to fund the account
-
Beneficiary information (optional but encouraged)
Depending on the bank, your application could take roughly one to 12 business days to process and approve. If you have negative information on your ChexSystems banking record, however, you might be turned down for a bank account and need to look elsewhere for a CD.
Read more: Here's what to do if your bank account application was denied
5. Fund your CD
Once you're approved for a CD, you'll have a limited amount of time to fund the account. Depending on the bank, it could be anywhere from 14 to 60 days.
The fastest way to move funds into your CD account is to transfer them from an account at the same bank, but it's not the only way. These are the options you can usually choose from:
-
Bank account transfer
-
Check
-
Money order
-
In-person deposit
Frequently asked questions (FAQs)
How much money is needed to open a CD account?
Each CD account has its own minimum deposit requirement, but you can find accounts with no set minimum.
Is it worth opening a CD account?
If you already have an emergency savings fund but have additional cash you want to set aside for a purchase in the near future, a CD is worth opening since it will pay you higher interest than a savings account.
Can I open a CD for myself?
If you're at least 18 years old you can open a CD for yourself. Learn more about how to open a bank account if you're under 18.
Can I open a CD at any bank?
You can open a CD at any bank that offers CDs, though some banks require you to open a checking or savings account first. For credit unions, you usually need to apply for membership before opening an account.
What happens when my CD matures?
After a CD matures, most banks give you a 10-day grace period to make a withdrawal or transfer funds. If you don't move the money, the bank will "auto-renew" the account, meaning they'll reinvest it into a new CD with the same term at the current available rate.
