CDs are still widely available from banks, credit unions, and online lenders
Yes, you can still buy certificates of deposit. Banks, credit unions, and online financial institutions all offer them. The market for CDs has not shrunk — it has shifted. You will find fewer CDs at brick-and-mortar bank branches because most people now open them online, where rates tend to be higher and the process takes minutes instead of a trip to the bank.
The reason CDs remain common is simple: they work. You lock in a fixed rate for a set time period, and that rate does not change. In an environment where savings account rates fluctuate, that certainty appeals to people who want to know exactly what their money will earn.
Key Takeaways
- Online banks and credit unions typically offer higher CD rates than traditional brick-and-mortar banks because their operating costs are lower.
- You can open a CD in minutes online by providing your name, Social Security number, and bank account information for the initial deposit.
- CD terms range from three months to five years or longer, and the rate you receive depends on the term length and the current market.
- Your CD is insured up to $250,000 per depositor at FDIC-insured banks or NCUA-insured credit unions, so your principal is protected even if the institution fails.
- Early withdrawal penalties exist at every institution, so confirm the penalty amount before you commit your money.
Where to buy CDs online
Online banks are the most common source for CDs today. Institutions like Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank all offer CDs with no minimum deposit or with minimums of $500 or less. You open an account, fund it from another bank account, and the CD begins immediately.
Credit unions also sell CDs, often at competitive rates. If you belong to a credit union, check their website or call to see what they offer. If you do not belong to one, you may be able to join through your employer, a professional association, or a community organization. The Credit Union Locator on the CO-OP Network website helps you find credit unions you can join.
Traditional banks still sell CDs, but their rates are usually lower than online options. If you have an existing relationship with a bank and want to keep everything in one place, that convenience may be worth the lower rate. But if rate matters more to you than convenience, online is where the better offers are.
What the CD purchase process looks like
Opening a CD online takes about 10 to 15 minutes. You will need your name, address, date of birth, Social Security number, and a bank account to transfer money from. Most institutions let you fund the CD immediately from a linked checking or savings account at another bank.
You choose the term — typically 3 months, 6 months, 1 year, 2 years, 3 years, or 5 years — and the rate is locked in at that moment. The CD matures on a specific date, and at maturity you can withdraw the money, renew it for another term at the current rate, or let it roll over automatically (which varies by institution).
Some institutions require a minimum deposit, often $500 or $1,000. Others have no minimum. Check the fine print before you start, because this affects whether a particular CD works for your situation.
How CD rates compare right now
CD rates change constantly and depend on the Federal Reserve's interest rate decisions. Longer terms generally pay more than shorter ones — a 5-year CD will usually pay more than a 1-year CD. Online banks typically pay 0.5% to 1% more than traditional banks for the same term.
To find current rates, visit the websites of several institutions and compare the same term side by side. Bankrate, DepositAccounts, and the FDIC's National Rates and Rate Caps table all publish rates from multiple lenders, so you can see the landscape without visiting each site individually.
Rate shopping matters. The difference between a 4.5% CD and a 5.0% CD on $10,000 for one year is $50 — real money that you earn simply by choosing the better rate.
Early withdrawal penalties and what they cost
Every CD has an early withdrawal penalty if you take your money out before the maturity date. The penalty is usually expressed as a number of months of interest. A CD with a 6-month penalty means you lose 6 months of the interest you would have earned, even if you withdraw after 1 month.
Penalties vary widely. Some online banks charge 3 months of interest; others charge 6 or 12 months. Before you open a CD, find the penalty amount on the institution's website or call and ask. Write it down. If you think there is any chance you might need the money before maturity, the penalty matters more than the rate.
A few banks offer "no-penalty CDs" that let you withdraw without a penalty, but the rate on these is lower than on standard CDs. They exist for people who want the certainty of a fixed rate but also need access to their money.
FDIC and NCUA insurance protects your principal
When you buy a CD from an FDIC-insured bank, your deposit is insured up to $250,000. When you buy from an NCUA-insured credit union, the same $250,000 protection applies. This means if the institution fails, the government backs your money.
The insurance covers the principal and the accrued interest up to the $250,000 limit. If you have $250,000 in a CD at one bank and another $250,000 at a different bank, both are fully insured because the insurance is per depositor per institution.
Check the FDIC's BankFind tool or the NCUA's Credit Union Locator to confirm that an institution is insured before you open an account. This is a quick step that takes 30 seconds and eliminates risk.
CDs versus savings accounts and money market accounts
The main trade-off is flexibility for rate. A savings account lets you withdraw money anytime without penalty, but the rate is usually lower and can change at any time. A CD locks in a higher rate but locks up your money for the term you choose.
A money market account sits in the middle — it pays more than a savings account but usually less than a CD, and you can withdraw money, though there are limits on how often you can do so per month.
If you know you will not need the money for at least 6 months or a year, a CD usually makes sense. If you might need it sooner, a savings account is safer because there is no penalty. Some people use both: a CD for money they are certain they will not touch, and a savings account for their true emergency fund.
Frequently Asked Questions
Do I need a minimum amount of money to open a CD?
It depends on the institution. Many online banks have no minimum or a minimum of $500. Some traditional banks require $1,000 or more. Check the specific bank's website before you start the process. If you have less than the minimum, look for an institution with a lower threshold or no minimum at all.
What happens to my CD when it matures?
At maturity, you have several options: withdraw the money, renew the CD for another term at the current rate, or let it roll over automatically. Most institutions will roll it over automatically if you do not tell them otherwise, but the new rate may be different from the original one. Check your institution's policy and set a reminder before maturity so you can decide what to do.
Can I open multiple CDs at the same bank?
Yes. You can open as many CDs as you want at the same institution, and each one is insured separately up to $250,000. Some people use this strategy to build a CD ladder — opening CDs with different maturity dates so that money becomes available at regular intervals.
What if I need my money before the CD matures?
You can withdraw it, but you will pay the early withdrawal penalty. Calculate what you will actually receive after the penalty is deducted. Sometimes the penalty is small enough that it makes sense to withdraw; sometimes it is large enough that you should wait. Compare the penalty cost to whatever you need the money for and decide from there.
Are online bank CDs as safe as CDs from a traditional bank?
Yes, as long as the online bank is FDIC-insured. The FDIC insurance is the same whether the bank has branches or operates only online. Check the FDIC's BankFind tool to confirm the institution is insured before you open an account.