Banks, credit unions, and online brokers all offer CDs, and rates vary significantly between them
You can open a CD at a traditional bank branch, a credit union, an online bank, or a brokerage firm. Each option has different rate structures, minimum deposits, and account features. The highest rates are almost always at online banks and brokerages, while traditional brick-and-mortar banks typically offer lower rates but may give you in-person service. Credit unions often fall in the middle and may offer better rates to members.
The rate you receive depends on where you open the CD, how much you deposit, and how long you lock your money away. A one-year CD at a large national bank might pay 0.5% annual percentage yield (APY), while the same CD at an online bank might pay 4.5% or higher. Over a $10,000 deposit, that difference compounds into hundreds of dollars in extra earnings. Shopping across different institutions is the only way to find the best rate for your timeline and deposit amount.
Key Takeaways
- Online banks and brokerages typically offer the highest CD rates because they have lower overhead costs than physical branches.
- Traditional banks and credit unions offer lower rates but may provide in-person support and easier access to other banking services.
- The Federal Deposit Insurance Corporation (FDIC) insures CDs up to $250,000 per depositor at each bank, so verify coverage if you are depositing more than that amount.
- You can compare rates across institutions using financial websites, but you must contact each bank or brokerage directly to open an account and fund the CD.
Online banks and brokerages offer the highest rates
Online banks have no physical branches, which means lower operating costs and higher rates passed to customers. Banks like Marcus, Ally, and American Express Personal Savings regularly offer CD rates well above the national average. You open an account entirely online, fund it by transferring money from another bank account, and receive statements and communications by email and through a website portal.
Brokerages like Fidelity, Charles Schwab, and Vanguard also sell CDs from multiple banks and often display rates side by side so you can compare. When you buy a CD through a brokerage, the brokerage holds it in your account, and you receive the interest directly. Brokerage CDs may have different tax reporting and early withdrawal rules than bank CDs, so read the terms before you commit.
The trade-off is that you have no phone support at most online banks, and if you need to withdraw money early, you must do it through a website or app. Some online banks charge early withdrawal penalties of three to six months of interest, while others charge a flat fee. Check the penalty structure before you open the account.
Traditional banks offer lower rates but in-person service
Large national banks like Chase, Bank of America, and Wells Fargo offer CDs at branch locations and online. Their rates are typically lower than online banks because they maintain physical locations and employ tellers. If you already have a checking account at a traditional bank, opening a CD there takes minutes and you can fund it immediately from your existing account.
Regional and community banks may offer rates between online banks and national chains. These banks often compete for deposits by offering better rates than the largest national banks but not quite matching online-only institutions. If you have a relationship with a local bank, ask what CD rates they currently offer before you assume an online bank is your only option.
Credit unions may offer competitive rates to members
Credit unions are member-owned financial institutions that sometimes offer CD rates comparable to online banks. You must be a member to open a CD, and membership rules vary by credit union. Some credit unions require you to live or work in a specific area, while others are open to anyone who joins an employer group or professional association.
Credit union CDs are insured by the National Credit Union Administration (NCUA) up to $250,000 per member, the same coverage as FDIC insurance at banks. If you are already a credit union member, contact your institution to ask about current CD rates. If you are not a member but interested, search for credit unions in your area or check whether you are may be able to access to join one through your employer or a professional group.
How to compare rates across institutions
Financial websites like Bankrate, DepositAccounts, and the Federal Reserve's rate tracker display current CD rates from multiple banks and update them daily. These sites let you filter by CD term (three months, one year, five years, and so on) and see which institutions offer the highest rates. The rates shown are often promotional rates available only to new customers, so verify the rate applies to you before you open an account.
Once you have identified a few institutions with competitive rates, visit their websites or call directly to confirm the rate is still available and to understand the terms. Ask about the early withdrawal penalty, the minimum deposit, whether interest is compounded daily or monthly, and when interest is paid out. Some banks offer higher rates for larger deposits, so if you are depositing $25,000 or more, ask whether a higher tier applies.
FDIC and NCUA insurance protects your deposit
The FDIC insures deposits at banks up to $250,000 per depositor per institution. If you open a CD at Bank A and Bank B, each account is insured separately up to $250,000. If you deposit $500,000 in a single CD at one bank, only $250,000 is insured and you lose the rest if the bank fails.
Credit union CDs are insured by the NCUA with the same $250,000 limit per member per institution. Before you open a CD, verify that the institution is FDIC-insured (for banks) or NCUA-insured (for credit unions) by checking the agency's website or asking the institution directly. This insurance does not affect your interest rate or your ability to withdraw money early — it only protects you if the institution fails.
Opening a CD online versus in person
Opening a CD online takes 10 to 15 minutes and requires only an email address, a Social Security number, and a way to fund the account. You complete the application on the bank's website, verify your identity (usually by answering security questions or uploading a photo ID), and then transfer money from another bank account. The CD opens within one to three business days.
Opening a CD in person at a branch takes longer but may be easier if you prefer to speak with someone. Bring a government-issued ID and proof of address (a recent utility bill or bank statement). The teller will complete the application, answer your questions about terms and rates, and you can fund the account immediately with cash or a check. The CD typically opens the same day.
Frequently Asked Questions
Do I need an existing account to open a CD?
No. Most banks and credit unions let you open a CD without an existing account. You will need to provide your Social Security number, date of birth, and address. If you are opening online, you will also need a way to fund the account, usually by transferring money from another bank.
What is the minimum deposit for a CD?
Minimums vary by institution and CD term. Some online banks have no minimum, while others require $500 or $1,000. Traditional banks often require $1,000 to $5,000. Ask each institution what its minimum is before you apply.
Can I move a CD from one bank to another?
You cannot transfer a CD directly, but you can let it mature and then open a new CD at a different bank. If you withdraw money before maturity, you will pay an early withdrawal penalty. Some banks allow you to move a CD to another institution without penalty if you do it within a short window after opening, so ask about this option.
Are online bank CDs as safe as CDs at big banks?
Yes, as long as the online bank is FDIC-insured. FDIC insurance covers your deposit up to $250,000 regardless of whether the bank has physical branches. Check the FDIC's website to confirm the bank is insured before you open an account.
What happens to my CD when it matures?
When your CD reaches its maturity date, the bank will either automatically renew it at the current rate or move the money to a savings account. Check your CD's terms to see which option applies. You can also withdraw the money without penalty once it matures, or move it to a CD at a different institution if rates have improved.