Banks, credit unions, and online brokers all offer CDs, each with different rates and terms

You can open a CD at a traditional bank branch, a credit union, an online bank, or a brokerage firm. Each type of institution sets its own rates and terms, so the CD you find at one place will have different terms and often a different rate than an identical CD elsewhere. The highest rates are usually at online banks and brokerages, because they have lower overhead costs. Traditional banks and credit unions often offer lower rates but may have other benefits, like a relationship with a local branch manager or membership perks.

The Federal Deposit Insurance Corporation (FDIC) insures CDs up to $250,000 per depositor per bank, and the National Credit Union Administration (NCUA) insures CDs at credit unions up to the same amount. Brokerages do not insure CDs themselves, but they hold CDs issued by banks that are FDIC-insured. This means your money is protected either way, as long as you stay within the insurance limits.

Key Takeaways

  • Online banks and brokerages typically offer the highest CD rates because they have lower operating costs than brick-and-mortar branches.
  • Traditional banks and credit unions may offer lower rates but can provide in-person service and may waive fees for members or customers with other accounts.
  • Your CD is insured up to $250,000 by the FDIC (at banks) or NCUA (at credit unions), regardless of where you open it.
  • Comparing rates across at least three to five institutions takes 15 minutes and can add hundreds of dollars in interest over the CD term.
  • Brokered CDs allow you to hold multiple CDs from different banks in one account, which simplifies tracking if you have more than $250,000 to deposit.

Online banks offer the highest rates with no branch visits

Online banks have no physical locations, so they pass savings on to depositors through higher CD rates. You open the account entirely online, fund it by transferring money from another bank account, and manage it through a website or mobile app. Most online banks have no monthly fees and no minimum balance requirements, though some require a minimum deposit to open the CD itself—often $500 to $1,000.

Online banks that offer CDs include Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, Discover Bank, and Capital One 360. Rates change daily, so the highest rate today may not be the highest tomorrow. You can check current rates on the bank's website or on rate-comparison sites like Bankrate, DepositAccounts, or the FDIC's own rate search tool.

Credit unions may offer competitive rates and member benefits

Credit unions are member-owned financial institutions, and many offer CD rates that compete with online banks. To open a CD at a credit union, you must first become a member, which usually requires living or working in a specific area or belonging to a particular group (such as employees of a certain company or members of a professional association). Membership is often free or costs a small one-time fee, usually $5 to $25.

Credit unions may waive CD fees or offer slightly higher rates to members who also have a checking account or savings account with them. Some credit unions belong to shared branching networks, which means you can conduct transactions at other credit unions' branches even if your own credit union is small. You can search for credit unions in your area through the CO-OP Network or by visiting the Credit Union National Association website.

Traditional banks offer convenience and relationship benefits

Banks with physical branches let you open a CD in person, deposit cash directly, and speak to a banker about your options. If you already have a checking or savings account at a bank, opening a CD there takes minutes and you may not need to provide additional documentation. Some banks offer relationship discounts—slightly higher rates or waived fees if you maintain a minimum balance in another account or set up direct deposit.

The trade-off is that traditional banks usually offer lower CD rates than online banks. A traditional bank's CD rate might be 0.5% to 1% lower than an online bank's rate for the same term. Over a two-year CD, that difference can cost you $100 to $200 in interest on a $10,000 deposit. However, if you value in-person service or already have accounts at the bank, the convenience may outweigh the lower rate.

Brokerages let you hold multiple CDs in one account

Brokerage firms like Fidelity, Charles Schwab, and Vanguard offer CDs issued by banks across the country. When you buy a CD through a brokerage, you own a CD issued by a bank (such as Ally or Marcus), but you hold it in your brokerage account. This setup is useful if you have more than $250,000 to invest in CDs, because you can buy CDs from different banks and keep them all in one place while staying within FDIC insurance limits at each bank.

Brokered CDs are FDIC-insured as long as the issuing bank is FDIC-insured, but the brokerage itself does not insure them. Rates on brokered CDs are usually competitive with online banks, and you can compare many options in one place. One drawback is that if you want to sell a brokered CD before maturity, you sell it on the secondary market, which means the price may be higher or lower than what you paid depending on interest rate movements.

How to compare CD rates across institutions

Start by listing the CD term you want—three months, six months, one year, two years, or five years. Then visit the websites of at least three to five institutions and note their current rates for that term. Write down the rate, any minimum deposit requirement, and whether there are any fees for early withdrawal or account maintenance.

Use a rate-comparison tool like Bankrate or DepositAccounts to see rates from dozens of institutions at once. These tools update daily and let you filter by term length and minimum deposit. Once you have narrowed your choices to two or three, visit each institution's website directly to confirm the rate is still current and to read the terms and conditions, especially the early withdrawal penalty.

What to check before opening a CD

Before you commit, verify that the institution is FDIC-insured (for banks) or NCUA-insured (for credit unions). You can check FDIC insurance status on the FDIC's BankFind tool and NCUA status on the NCUA's credit union search tool. If you are buying a brokered CD, confirm that the issuing bank is FDIC-insured.

Read the early withdrawal penalty, which is the amount of interest you lose if you take your money out before the CD matures. Penalties vary widely—some banks charge 90 days of interest, others charge 150 days or more. If you think you might need the money before maturity, look for a CD with a lower penalty or consider a shorter term instead. Also check whether the CD automatically renews at maturity and whether you can change the term when it renews.

Frequently Asked Questions

Do I need to have an existing account to open a CD?

No. Most banks and credit unions let you open a CD without having another account with them. However, some institutions offer higher rates or waived fees if you also maintain a checking or savings account. Online banks almost always let you open a CD as your first account with them.

Can I open a CD with less than the minimum deposit?

No. If an institution lists a minimum deposit of $1,000, you must deposit at least that amount to open the CD. However, you can shop around—some banks have no minimum, while others require $500 or $2,500. If you have a smaller amount, look for institutions with lower minimums.

What happens if I need the money before the CD matures?

You can withdraw the money, but you will pay an early withdrawal penalty, which is usually a set number of days of interest. For example, if the penalty is 150 days of interest and your rate is 4%, you lose roughly 1.6% of your deposit. Some banks offer no-penalty CDs with lower rates, which let you withdraw without penalty after a short waiting period.

Is my money safer at a big bank than a small online bank?

No. Both are insured up to $250,000 by the FDIC, so your money is equally safe as long as the institution is FDIC-insured. The size of the bank does not affect the insurance protection. Always verify FDIC or NCUA status before opening an account.

Can I move a CD to a different bank before it matures?

You can withdraw the money and pay the early withdrawal penalty, then open a new CD elsewhere. However, you cannot transfer a CD directly to another institution the way you can transfer a savings account. If you want to avoid the penalty, you must wait until the CD matures and then move the money.