How To Open a CD Account in 4 Simple Steps

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You shouldn’t have to be a professional banker to navigate through not only choosing which type of account is best for you but also how to open that account. Today, with both regular and online banking being at your fingertips, the number of options can be overwhelming. No matter what your savings goals are, if you have landed on opening a certificate of deposit, it is good to know what next steps to take. 

CD Overview 

CD accounts offer a guaranteed rate of interest and are FDIC insured just like your traditional savings account, checking account or money market account. A CD is considered a time deposit because you purchase it for a specified period, like 12 months or 5 years. If you redeem a CD before the maturity date, you’ll typically pay an early withdrawal fee based on the CD terms set by your financial institution.

How To Open a CD Account Step-by-Step

Opening a CD account is pretty straightforward. Here’s how you can open one in four simple steps.

  1. Find a bank or credit union you like that offers CDs.
  2. Choose the type of CD that best fits your needs.
  3. Apply for your preferred CD account.
  4. Fund the account with an initial deposit.

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1. Find a Bank or Credit Union You Like That Offers CDs 

Most major credit unions or banks offer CDs, but there are a few that don’t. If your current bank does, opening a CD account could qualify you for relationship rates if you have a checking or savings account at the same institution.

2. Choose the Type of CD That Best Fits Your Needs 

As you cannot withdraw funds from your CD without the risk of a penalty fee, it is important to choose not only the right type of CD account for you but also the right term length that works for your financial needs, schedule and goals. 

Types of CDs

Before choosing which CD to go with, compare the terms of the CD and the interest rates. These factors may vary depending on what bank or credit union you are using.

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Common Term Length Options of CDs

Choosing a term length is a crucial part of your financial planning as you have both short-term and long-term options. Make sure to note that whichever term you choose will be the period of time you cannot access your money. Here are some common term length options:

3. Apply for Your Preferred CD Account 

Once you know what type of CD you want to open, and for how long, you can apply at your local bank or credit union in person, by phone or online. Many online banks also have CDs so you can apply through their website. Once you have completed your application and it has been accepted, you can create your account and choose how you would like your interest to be paid. You are generally given either the option to have it disbursed regularly or at the end of the CD term. 

4. Fund the Account With an Initial Deposit

You may be able to transfer money online, send a check or pay in person to fund your account. The initial deposit is the only requirement, and unlike other accounts, you don’t keep adding to CDs, you just put your money in and leave it alone while it collects interest until the account matures.

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How a CD Works 

How different types of CDs work and how much they will earn depends on many factors including CD term length and the annual percentage yield that is offered by your bank. Heavily considered one of the lowest-risk forms of investing, CDs can be a safe way to grow your money for goals ranging from emergency funds to retirement funds. 

Here is a breakdown of how a CD account works:

CDs are considered one of the safest forms of investing. They earn higher interest rates than traditional savings accounts, they are low-risk, have predictable returns and you only have to pay fees if you try to access your money before the account matures.

Final Take: Making CDs Worth Your Investment

If you are seriously considering opening a CD account, think about what your goals for it are. This will help you determine how long of a term you should use and how much you will have earned when the term ends. More money doesn’t always mean more problems, it could just mean more interest earned. 

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Explore More on CD Accounts


Here are the answers to some commonly asked questions regarding CD accounts.
  • How much money do you need to open a CD account?
    • Though some banks do not have a minimum deposit requirement, on average most require an initial deposit of either $500 or $1,000 to open a CD account.
  • What are the requirements to open a CD account?
    • Here are some basic requirements to open a CD account:
      • -Make your initial deposit of $500 or $1,000 into the account.
      • -There are no required additional deposits.
      • -Don't access your money for the length of the CD term.
      • -Get your money plus any interest earned back when the account reaches maturity.
  • Can you get a CD at any bank?
    • Most major banks, online banks, credit unions or other financial institutions will offer CD accounts. However, some do not have this feature so be sure to check before heading out to invest.