Where to buy a CD and what to compare before you choose

You can buy a CD from a bank, credit union, or brokerage firm. Each charges different rates and has different terms, so comparing them before you commit matters. Banks and credit unions let you buy directly through their websites or in person; brokerages let you buy CDs issued by many different institutions in one place, which makes side-by-side comparison easier.

The main things to compare are the interest rate (called the annual percentage yield, or APY), the term length (how long your money stays locked in), and the early withdrawal penalty if you need the money before maturity. A CD with a higher APY might have a longer term or a steeper penalty, so you are trading liquidity for yield. Write down the APY, term, and penalty for each option you are considering, then decide which trade-off fits your timeline and your risk of needing the money early.

Key Takeaways

  • Banks, credit unions, and brokerages all sell CDs, and rates vary significantly between them, so comparing at least three options before buying is worth the time.
  • The annual percentage yield (APY) is the rate you earn; the term is how long your money is locked in; the early withdrawal penalty is what you pay if you take it out early.
  • You will need to provide your Social Security number, proof of identity, and a funding source (bank account or wire transfer) to open a CD.
  • CDs mature on a specific date, and you then have a window (usually 7 to 10 days) to decide whether to withdraw the money, roll it into a new CD, or let it renew automatically.

Step-by-step: buying a CD from a bank or credit union

Start by visiting the website of the bank or credit union where you want to buy. Look for a link labeled "CDs" or "Certificates of Deposit" — it is usually under Savings or Investments. Click through to see the available terms (3 months, 6 months, 1 year, 2 years, and so on) and the APY for each one.

Once you have found the term and rate you want, click the button to open a CD. You will be asked to provide your name, address, date of birth, and Social Security number. Have your driver's license or passport ready so you can verify your identity. You will also choose how to fund the CD — either by transferring money from a bank account you already have, or by wire transfer. Enter the amount you want to deposit (the minimum is usually $500 to $1,000, but varies by institution) and confirm the purchase. The CD will be created immediately, and your money will be transferred within one to three business days.

Step-by-step: buying a CD through a brokerage

If you already have a brokerage account (at firms like Fidelity, Charles Schwab, or Vanguard), you can buy CDs directly through that account. Log in, find the CDs or Fixed Income section, and search by term length or APY. Brokerages show you CDs from many banks and credit unions at once, so you can compare rates without visiting each institution separately.

Select the CD you want and enter the amount. The purchase will settle within one to three business days, and the CD will appear in your account. You do not need to provide your Social Security number again if you already have an account open. If you do not have a brokerage account, you will need to open one first, which takes about 10 minutes online and requires the same identity verification (name, address, date of birth, Social Security number, and a funding source).

Understanding the maturity date and what happens next

When you buy a CD, you choose or are assigned a maturity date — the day your term ends. On that date, your CD stops earning interest. Most institutions then give you a window of 7 to 10 days to decide what to do with the money. You can withdraw it in full, roll it into a new CD at the current rate, or let it renew automatically into a new CD at the same term length (though usually at a different rate, because rates change).

If you do nothing during the grace period, the CD will renew automatically. This is convenient if you want to keep the money locked in, but it means you will accept whatever rate the institution is offering at that moment — which may be lower than what you could get elsewhere. To avoid this, set a calendar reminder for one week before your maturity date, then log in and decide whether to withdraw, roll over, or let it renew. If you want to move the money to a higher-yielding CD at a different institution, you have time to do that during the grace period.

Early withdrawal penalties and when they apply

If you withdraw money from a CD before the maturity date, you will pay an early withdrawal penalty. The penalty is usually expressed as a number of months of interest — for example, "3 months of interest" or "6 months of interest." If your CD is earning 4% APY on $10,000, that is $400 per year, or about $33 per month. A 3-month penalty would cost you $100.

Some institutions offer no-penalty CDs, which let you withdraw your money early without losing interest, though you still forfeit any interest that has not yet accrued. These CDs usually pay a lower APY than standard CDs, so you are trading yield for flexibility. If you think you might need the money within the term, a no-penalty CD or a shorter-term CD (like 3 or 6 months) may be a better choice than a longer-term CD with a steep penalty.

FDIC insurance and how much protection you have

CDs held at banks are protected by FDIC insurance up to $250,000 per depositor, per institution. This means if the bank fails, the government will reimburse you for your CD balance up to that limit. CDs held at credit unions are protected by NCUA insurance, which works the same way — up to $250,000 per depositor, per institution.

If you have more than $250,000 to invest in CDs, you can spread the money across multiple banks or credit unions to stay within the insurance limit at each one. For example, you could buy a $250,000 CD at Bank A and a $250,000 CD at Bank B, and both would be fully insured. CDs bought through a brokerage are also FDIC-insured at the underlying bank, but the brokerage itself does not insure them, so confirm the insurance status before you buy.

Comparing CD rates and finding the best deal

CD rates change daily, so the rate you see today may not be available tomorrow. Before you buy, check rates at a minimum of three institutions — for example, your own bank, a second bank known for high rates, and a brokerage. Write down the APY, term, and penalty for each, then calculate what your money will be worth at maturity. A CD paying 4.5% APY for 1 year on $10,000 will earn $450 and be worth $10,450 at maturity. A CD paying 4.0% APY will earn $400 and be worth $10,400. The difference is $50 — small, but worth a few minutes of comparison.

Websites like Bankrate, DepositAccounts, and the Federal Reserve's National Information Center let you search CD rates by term and institution. These sites do not sell CDs themselves; they just show you what is available so you can compare. Once you have found the rate you want, go directly to that institution's website or app to buy — do not buy through a third-party site, because you want to make sure you are dealing with the actual bank or credit union.

Frequently Asked Questions

Can I buy a CD with money from another CD that is about to mature?

Yes. When your CD matures, you can withdraw the money and use it to buy a new CD at the same institution or a different one. You have a grace period (usually 7 to 10 days) to make this decision, so you do not have to rush. If you want to move the money to a higher rate, use the grace period to research and buy the new CD before the old one renews automatically.

What is the difference between a CD ladder and just buying one CD?

A CD ladder is a strategy where you buy multiple CDs with different maturity dates — for example, one 1-year CD, one 2-year CD, and one 3-year CD. As each one matures, you can reinvest it at the current rate. This gives you more flexibility than a single long-term CD, because part of your money becomes available each year. It also lets you take advantage of rate increases without waiting for the entire ladder to mature.

Do I have to keep the money in the CD until it matures?

No, but you will pay an early withdrawal penalty if you take it out before the maturity date. The penalty varies by institution and term length — it could be a few months of interest or several months, depending on the CD. If you think you might need the money, ask about the penalty before you buy, or choose a no-penalty CD or shorter-term CD instead.

What happens to my CD if the bank fails?

Your CD is protected by FDIC insurance up to $250,000. If the bank fails, the FDIC will pay you the full value of your CD (principal plus accrued interest) up to that limit. You do not need to do anything — the FDIC handles it automatically. If your CD is over $250,000, only the first $250,000 is insured at that bank.

Can I change my mind after I buy a CD?

Once you buy a CD, you own it and cannot cancel it without paying the early withdrawal penalty. Some institutions have a short window (24 to 48 hours) to cancel without penalty, but this is rare. Before you buy, make sure the term, rate, and amount are what you actually want, because changing your mind later will cost you.