Wells Fargo certificates of deposit are an attractive savings product for account holders looking to grow their savings without taking on too much risk. With a set interest rate at opening, investors know exactly what their assets will be worth when they mature. But are Wells Fargo CDs safe? Here are some details you should know.
A Guaranteed Return on Investment
One of the main reasons so many investors turn to CDs is that they offer a guaranteed return, as opposed to the volatility of stocks, ETFs and even mutual funds. When opening a CD with Wells Fargo, the account holder agrees to a specific interest rate and term. They know from the start how much interest they’re going to earn.
By leaving their funds in the CD for the full term, investors receive the initial deposit and interest at the end of the term. However, withdrawing funds from a CD account early can incur significant penalties, so this product doesn’t offer much flexibility.
At maturation, investors can also choose to renew their CDs and continue investing over a new term. The interest rate varies over time, along with different interest rates for varying principal amounts and terms. This means that the new interest rate won’t necessarily be the same upon renewal.
Wells Fargo CDs Feature FDIC Insurance
As long as Wells Fargo itself stays viable, its CDs are an incredibly secure investment. In addition, account holders can rest easy knowing that their Wells Fargo CDs have FDIC insurance.
The Federal Deposit Insurance Corp. protects account holders against the loss of their deposits when banking with insured banks. This insurance covers up to $250,000 held in insured accounts, including both interest and principal. If anything happens to Wells Fargo that prevents the bank from returning insured deposits, the FDIC will repay account holders.
What Are the Limits of FDIC Insurance?
Of course, FDIC insurance isn’t limitless. First, the insurance only covers up to $250,000 per bank, per account holder and per account ownership category. This means that you could have multiple accounts across separate banks that each have $250,000 of coverage.
FDIC insurance also features different categories, each of which is considered independently. Those categories include:
- Single accounts
- Joint accounts
- Trust accounts
- Business accounts
Account holders could have up to $250,000 in FDIC insurance coverage for each of these categories.
FDIC insurance is also limited in the types of products it covers. In general, it only covers deposit products, such as checking, savings and money market deposit accounts. That also includes CDs.
However, it doesn’t include a wide range of other products. Some notable exclusions are:
- Stocks
- Bonds
- Mutual funds
- Cryptocurrencies
- Life insurance policies
- Annuities
- Municipal securities
CDs offer a better choice than non-insured assets for investors concerned with absolutely guaranteeing their investments.
How Does Wells Fargo Protect Accounts?
FDIC insurance protects Wells Fargo CDs against potential bank collapse, but what about much more imminent everyday threats? Bank fraud is a serious risk today, but Wells Fargo has a variety of measures in place to protect its customers’ accounts.
First, it offers 24/7 fraud monitoring for customer accounts. Suspicious activity will trigger a response that includes reaching out to customers to verify activity through email, text, mobile app notifications or phone. Wells Fargo online banking also features robust encryption and security features.
How To Open a CD With Wells Fargo
If Wells Fargo CDs sound like the right savings product, it’s easy to get started. Investors can open an account online or by visiting a Wells Fargo branch. Wells Fargo offers a variety of special fixed-rate CDs, along with its standard fixed-rate CDs. Standard fixed-rate terms are available for three, six or 12 months, with special fixed-rate CDs often offering other terms.
There are a variety of options to fund a new Wells Fargo CD account, including transferring funds from a Wells Fargo account, transfer from another bank, or via check or money order.
Final Take
Wells Fargo CDs are an excellent choice in terms of security. The guaranteed return and FDIC insurance mean that investors are exposed to minimal risk. However, that isn’t always the only thing that matters. Before investing, be sure to consider other banks to find the best CD rates and speak with a financial advisor to see if CDs really are the right choice for your risk-reward ratio.
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