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How much do I need to open a CD?

Yahoo Personal Finance· Getty Images
Lindsay VanSomeren
3 min read

Opening a new certificate of deposit (CD) can be a great way to accelerate your savings because they typically pay a more interest than a savings account. They can also help you avoid spending your savings on impulse buys because you’ll have to pay a penalty if you take money out of a CD before it matures.

Similarly to how banks and credit unions individually set the rates on loans and deposit accounts, each institution sets its own minimum deposit requirements for CDs. For most financial institutions, you’ll need at least $500 to $1,000 to open an account. It’s possible to find CDs with no minimum balance requirement, but it’s rare.

Some banks and credit unions also offer jumbo CDs, which have higher minimum deposit requirements — typically between $50,000 to $100,000 minimum — but also offer higher interest rates than traditional CDs.

Using certain savings strategies can be challenging because of high CD minimum deposit requirements. For example, if you’re using a CD ladder approach, you’ll need to split up your total deposit into several chunks. You might open five CDs that mature at different times, so your money becomes available more frequently while you still earn the highest interest rate possible.

If you need at least $1,000 for each CD minimum deposit, you need at least $5,000 to get started. Unfortunately, that’s more than many people have lying around.

Generally, no. Certificates are timed deposits, which means they’re locked. That prevents you from making any withdrawals or deposits during the term of the account.

Some banks and credit unions offer "add-on" CDs, which allow you to make additional deposits. The specifics vary for each bank and credit union. Some allow unlimited deposits, while others let you make a few extra deposits before the CD matures.

If you think you may not have enough money to open a CD, consider the following:

  • Look into a high-yield savings account: The rates some online banks offer on their high-yield savings accounts are far higher than even the CDs offered at other banks. Plus, you have the added advantage of accessing your funds whenever you want.

  • Shop around: If you explore other banks and credit unions, you may find a lower minimum balance requirement or a higher CD rate.

  • Open an add-on CD: These often have lower CD minimum deposit requirements to begin with, making it easier for you to get started.

  • Check out club savings accounts: If you like the idea of timed deposits, one idea is a club account. These are more common at credit unions and often used for specific savings goals, such as holiday gift shopping or vacations.

Remember, when you open a CD, you're locking your money away for a set period of time. If you take money out early, you'll pay a penalty and undercut one of the main benefits of a CD. Be careful not to put so much of your savings into a CD that you'll have trouble paying for an unexpected expense.