Banks are the most straightforward place to open a CD

Your own bank or credit union is usually the easiest starting point. Walk in, call the branch, or log into your online account and look for a "CDs" or "Certificates of Deposit" section. You'll see the rates they're currently offering, the minimum deposit required (often $500 to $2,500, though some banks go lower), and the term lengths available—typically 3 months, 6 months, 1 year, 3 years, or 5 years.

The advantage is convenience: you already have a relationship with the bank, you know where to go if something goes wrong, and the process takes minutes. The disadvantage is that your bank's CD rates may be lower than what you can find elsewhere. Banks compete on service and convenience, not always on rate.

If you use a credit union instead of a bank, the process is identical, but credit unions sometimes offer slightly higher rates because they're member-owned and don't have to generate profits for shareholders.

Online banks typically offer higher rates than brick-and-mortar branches

Online-only banks like Marcus, Ally, American Express Personal Savings, and Discover have lower overhead costs, so they pass some of that savings to you in the form of higher CD rates. You open the account entirely online—no branch visit needed—and your money sits in a digital account you access through a website or app.

The tradeoff is that you can't walk into a location if you have a problem. Customer service is phone or email only. For most people this is fine; for others, the slightly higher rate isn't worth losing the ability to speak to someone in person.

Online banks are FDIC-insured just like traditional banks, so your money is protected up to $250,000 per account holder per bank. Check the bank's FDIC certificate on its website to confirm.

Brokerage firms let you shop across multiple banks at once

Companies like Fidelity, Charles Schwab, and Vanguard offer what's called a "CD ladder" or "CD marketplace." You log in, see rates from dozens of banks at once, and buy a CD directly through the brokerage. The brokerage doesn't issue the CD itself—it's just a middleman connecting you to the actual bank.

The main benefit is comparison shopping without visiting multiple websites. You can see 20 different rates side by side and pick the one that suits you. The main drawback is that some brokerages charge a small fee to buy or sell the CD early, though many have eliminated this.

Your money is still FDIC-insured because the underlying bank is the one holding it, not the brokerage. However, if you buy CDs from multiple banks through one brokerage, each CD is insured separately up to $250,000 per bank.

Treasury Direct lets you buy CDs issued by the U.S. government

The U.S. Department of the Treasury sells short-term savings products called Treasury Bills (T-Bills) through a website called TreasuryDirect.gov. These aren't technically CDs—they're government debt—but they work similarly: you lock in money for a set period (4 weeks, 8 weeks, 13 weeks, 26 weeks, or 52 weeks) and get a fixed return.

Treasury Bills are backed by the full faith and credit of the U.S. government, so they carry virtually no default risk. Rates change weekly based on auction results. You buy them with no fees and no middleman. The downside is that the terms are shorter than most CDs, and you can't withdraw early without selling the T-Bill on the secondary market (which may cost you money if rates have risen).

Most people use Treasury Direct for very short-term savings—money they know they'll need in a few months. For longer-term CDs, a bank or online bank is more practical.

Money market accounts are an alternative if you want flexibility

A money market account is not a CD, but it's worth knowing about if you're deciding where to put your savings. It's a hybrid between a checking account and a savings account: you earn interest (usually lower than a CD rate), but you can withdraw money whenever you want without penalty.

The tradeoff is obvious: lower rate in exchange for no lock-in period. If you're not sure you can leave the money untouched for the full CD term, a money market account might be the safer choice, even if it earns less.

Compare rates across at least three sources before deciding

CD rates change constantly—sometimes daily. Before you commit, check rates at your current bank, at least one online bank, and either a brokerage or TreasuryDirect. Websites like Bankrate, DepositAccounts, and DepositRates track current rates across hundreds of institutions and update them regularly.

A difference of 0.5% might not sound like much, but on a $10,000 CD it means $50 per year. Over a 5-year term, that's $250 in extra interest. The five minutes it takes to compare is worth it.

Also check the minimum deposit. Some banks require $25,000 to open a CD at their highest rate, while others have no minimum. If you're starting with $5,000, you need to know which banks will actually take your money.

Key Takeaways

  • Your own bank or credit union is the easiest option but often has lower rates than online banks or brokerages.
  • Online banks like Marcus and Ally typically offer higher CD rates because they have lower operating costs.
  • Brokerages like Fidelity and Schwab let you compare rates from multiple banks in one place without visiting each bank's website.
  • Treasury Bills through TreasuryDirect are backed by the U.S. government and have no fees, but terms are shorter than most CDs.
  • Checking rates at three different sources takes a few minutes and can save you hundreds of dollars in interest over the CD term.

Frequently Asked Questions

Is my money safe if I buy a CD from an online bank?

Yes. Online banks are FDIC-insured the same way brick-and-mortar banks are. Your deposits are protected up to $250,000 per account holder per bank. Check the bank's FDIC certificate on its website to confirm the insurance is current.

Can I withdraw money from a CD early?

You can, but most banks charge an early withdrawal penalty—usually a few months of interest. The penalty amount varies by bank and CD term. Read the terms before you open the CD so you know what you'd lose if you need the money sooner.

What's the difference between a CD and a Treasury Bill?

A CD is issued by a bank; a Treasury Bill is issued by the U.S. government. T-Bills have shorter terms (up to 52 weeks) and no fees. CDs typically offer longer terms and sometimes higher rates. Both are safe, but T-Bills are backed by the government while CDs are backed by FDIC insurance.

Do I need a checking account at a bank to open a CD there?

No. Most banks let you open a CD without having any other account with them. However, some online banks require you to open a linked savings account as well. Check the bank's requirements before you start the process.

Should I buy multiple CDs from different banks?

If you have more than $250,000 to invest, yes—each CD at a different bank is insured separately. If you have less, one CD is fine. Some people also buy CDs with different maturity dates so money comes due at different times, but that's a strategy choice, not a requirement.