Banks, credit unions, and online platforms are the three main places to buy CDs
You can open a CD at a bank, a credit union, or an online bank. Each type offers different rates, terms, and account features. Banks and credit unions are institutions you may already use for checking or savings accounts. Online banks exist only on the internet and typically offer higher rates because they have lower overhead costs. The choice depends on whether you value convenience and personal service, or whether you want the highest possible rate.
All three types are insured by the same federal agencies — the Federal Deposit Insurance Corporation (FDIC) for banks and the National Credit Union Administration (NCUA) for credit unions — so your money is protected up to $250,000 per account holder per institution.
Key Takeaways
- Banks, credit unions, and online banks all sell CDs, and rates vary significantly between them — shopping around can add hundreds of dollars to your return.
- Online banks typically offer the highest CD rates because they have lower operating costs, but they offer no in-person service.
- Credit unions often offer competitive rates to members and may have lower minimum deposit requirements than banks.
- Banks give you the option to walk in, speak to someone, and manage your account in person, but usually offer lower rates than online competitors.
Banks: convenience and relationship banking
Traditional banks let you open a CD in person, by phone, or online. You can visit a branch to ask questions, deposit cash, or speak to someone about your options. Most banks offer a range of CD terms — typically from three months to five years — and you can often renew automatically when the CD matures.
Bank CD rates are usually lower than what online banks offer for the same term. This is partly because banks have physical locations, staff, and higher operating costs. However, if you already have a checking or savings account at a bank, opening a CD there may be simpler because you already know the institution and have an established relationship.
To open a CD at a bank, you will need a government-issued ID, proof of address (a utility bill or lease), and your Social Security number. Minimum deposits vary by bank and by term — some banks require $500 to $1,000, while others may require $10,000 or more for certain terms.
Credit unions: member-owned alternatives
Credit unions are member-owned financial institutions that often offer competitive CD rates and may have lower minimum deposit requirements than banks. To open a CD at a credit union, you must first become a member. Membership is usually based on where you work, where you live, or a group you belong to — such as a professional association or employer.
Credit union CD rates can rival or exceed bank rates, and some credit unions offer terms that banks do not, such as very short-term CDs of one month or two months. Like banks, credit unions are federally insured (through the NCUA), so your deposits are protected.
To find a credit union you can join, use the CO-OP Network search tool or the Alliant Credit Union locator. Once you confirm you are may be able to access to join, you can open a membership account and then open a CD. Some credit unions allow you to open accounts online, while others require an in-person visit or a mailed application.
Online banks: highest rates, no branches
Online banks operate only through websites and mobile apps — there are no physical branches. Because they have no buildings, staff, or tellers to pay for, they can offer higher CD rates than traditional banks. The trade-off is that you cannot walk in, deposit cash, or speak to someone face-to-face.
Online banks typically offer a wider range of CD terms than brick-and-mortar banks, including very short terms (three months, six months) and longer terms (seven years, ten years). You can open an account and fund it entirely online using a bank transfer or a check deposited by mobile app.
Popular online banks that sell CDs include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, and Discover Bank. Each has different minimum deposits, terms, and rates. Because rates change frequently, it is worth checking the current rates at several online banks before you decide.
Brokerage firms: CDs sold through investment accounts
Some people buy CDs through a brokerage account — an investment account held at a firm like Fidelity, Charles Schwab, or Vanguard. These are called brokered CDs, and they are issued by banks but sold through the brokerage.
Brokered CDs can offer higher rates than you would find at the bank directly, and they give you access to CDs from many different banks in one place. However, they are more complex than bank CDs. If you sell a brokered CD before maturity, its value can go up or down depending on interest rates, so you may lose money. Bank CDs, by contrast, have a fixed value if you hold them to maturity.
Brokered CDs are insured by the FDIC, but only up to $250,000 per bank issuer — not per brokerage. If you own brokered CDs from five different banks through the same brokerage, each is insured separately. This makes brokered CDs useful if you want to own CDs from multiple banks and stay within insurance limits.
How to compare rates across institutions
CD rates vary by institution, term length, and deposit amount. A one-year CD at one bank might pay 4.5%, while the same term at another bank pays 5.2%. Over a year, that difference adds up.
To compare, visit the websites of several banks, credit unions, and online banks and look for their current CD rates. Most institutions list rates by term on their homepage or in a rates table. Write down the rate, the term, and the minimum deposit for each option you are considering. Then calculate how much interest you would earn on your deposit amount at each rate.
Keep in mind that rates change frequently — sometimes daily. If you find a rate you like, you can usually lock it in by opening the account that day, though some institutions may require you to fund the account within a certain number of days.
What you will need to open a CD
Regardless of where you open a CD, you will need the same basic information. Have your government-issued ID (driver's license or passport), proof of address (a recent utility bill, lease, or bank statement), and your Social Security number ready. Some institutions may also ask for your employment information or the source of the funds you are depositing.
If you are opening a CD online, you can usually upload these documents or answer questions about them during the application process. If you are opening in person at a bank or credit union, bring the physical documents with you.
You will also need to decide how to fund the CD. You can transfer money from another bank account, deposit a check (if the institution accepts mobile check deposit), or in some cases, deposit cash in person.
Frequently Asked Questions
Do online banks pay higher rates than traditional banks?
Yes, online banks typically offer higher CD rates than traditional banks for the same term. This is because online banks have lower operating costs. However, you cannot deposit cash or speak to someone in person. If the rate difference is significant enough to matter for your deposit amount, an online bank may be worth the trade-off.
Can I open a CD at a credit union if I do not work there?
It depends on the credit union's membership rules. Some credit unions are open to anyone in a certain geographic area, while others are limited to employees of a specific company or members of a specific group. Use the CO-OP Network search tool to find credit unions in your area and check their membership requirements.
What is the difference between a bank CD and a brokered CD?
A bank CD has a fixed value and a set maturity date. A brokered CD can be sold before maturity, but its value changes based on interest rates — you may get back less than you deposited. Brokered CDs are useful if you want access to CDs from many banks in one account, but they are more complex.
Is my money safe in an online bank CD?
Yes, online bank CDs are insured by the FDIC up to $250,000 per account holder per institution, just like CDs at traditional banks. The FDIC insurance applies regardless of whether the bank has physical branches.
Can I move a CD from one bank to another before it matures?
You can withdraw the money, but most banks charge an early withdrawal penalty if you take it out before the maturity date. The penalty is usually a certain number of months of interest. It is usually cheaper to let the CD mature and then move the money to a new CD elsewhere, unless rates have risen significantly.