Banks and Credit Unions Offer the Easiest Route
Your own bank or credit union is usually the simplest place to open a CD. You walk in, call, or log into your online account, and the process takes minutes. The staff already know your account history, so there is no extra paperwork. If you bank with them, you can often link the CD to your existing checking account for easy funding.
The trade-off is that banks and credit unions rarely offer the highest rates. A large national bank like Chase or Bank of America typically pays less than an online-only bank. Credit unions sometimes pay better rates to members, especially if you have been with them for years, but you have to be a member first — and membership rules vary by credit union.
Call your bank's customer service line or visit a branch to ask what CD rates they currently offer. Rates change weekly, so the number you see on their website today may not be what you get tomorrow. Ask whether they have a minimum deposit requirement — many banks require $500 to $1,000 to open a CD, though some have no minimum.
Online Banks Pay Higher Rates but Require More Steps
Online-only banks like Marcus (owned by Goldman Sachs), Ally, and American Express Personal Savings consistently offer rates 0.5% to 1.5% higher than brick-and-mortar banks. They can pay more because they have no physical branches to maintain. The catch is that you cannot walk into a location or call a local branch — everything happens by phone, email, or their website.
Opening a CD at an online bank takes 10 to 20 minutes. You create an account, verify your identity (usually by uploading a photo ID), and link a bank account to fund the CD. The money transfers electronically, typically within one to three business days. If you already have a savings account with the online bank, the process is even faster.
Online banks have no physical presence, so if something goes wrong, you troubleshoot by phone or chat. Most have good customer service, but the experience is different from sitting across a desk from someone. Check whether the bank is FDIC-insured — all the major online banks are, but it is worth confirming before you send money.
Brokerage Firms Offer More CD Options but Require an Account
Brokerages like Fidelity, Charles Schwab, and E-Trade sell CDs from hundreds of banks and credit unions in one place. Instead of calling ten different institutions, you can compare rates and terms on a single platform. This is useful if you want to ladder CDs — buying multiple CDs with different maturity dates — because you can do it all in one account.
The downside is that you must already have a brokerage account, or you have to open one. If you do not invest in stocks or bonds, opening a brokerage account just to buy a CD adds an extra step. Brokerage CDs also sometimes charge a small fee if you sell before maturity, though this is less common than it used to be.
Brokerage CDs are still FDIC-insured, but the insurance works differently. The brokerage holds the CD at the issuing bank, and the FDIC insures up to $250,000 per bank per depositor. If you buy CDs from five different banks through the brokerage, each one is insured separately up to $250,000. This matters if you are depositing more than $250,000.
Treasury Direct for Government-Backed CDs
The U.S. Treasury does not sell traditional CDs, but it sells Treasury bills and Treasury notes that work similarly — you lend money to the government for a set period and receive interest. You buy them directly through TreasuryDirect.gov, the official government website, with no middleman and no fees.
Treasury bills mature in four weeks to one year. Treasury notes mature in two to ten years. The rates are set by auction and change weekly. Because they are backed by the U.S. government, they are considered safer than bank CDs, though the rates are usually lower than what online banks offer for CDs.
Opening a TreasuryDirect account takes about 15 minutes. You need a Social Security number, a valid email address, and a bank account to fund purchases. You cannot buy Treasuries through a regular bank — you must use TreasuryDirect or a brokerage. If you want the simplicity of a government-backed product without the brokerage account, TreasuryDirect is the direct route.
Money Market Accounts as an Alternative to CDs
A money market account is not a CD, but it sits in the same category of safe, low-risk savings. You deposit money, earn interest, and can withdraw it anytime without penalty. The interest rate is usually lower than a CD rate, but you do not lock your money away for months or years.
Money market accounts are offered by the same places that sell CDs — banks, credit unions, and online banks. If you are unsure whether you want to commit to a CD's fixed term, a money market account lets you earn interest while keeping your options open. You can always move the money into a CD later if rates stay high.
Comparing Rates Across Providers
CD rates change constantly, so comparing before you buy matters. Bankrate.com and DepositAccounts.com list current rates from dozens of banks and credit unions, updated daily. You can filter by term length (3 months, 1 year, 5 years, and so on) and see which institutions are paying the most.
When you compare, look at the annual percentage yield (APY), not just the interest rate. APY includes how often the bank compounds interest, so it is the true number you will earn. A CD with a 4.5% APY will earn more than one with a 4.5% rate if the second one compounds less frequently.
Also check the minimum deposit. Some banks require $25,000 to open a CD at their highest rate, while others have no minimum. If you are depositing $5,000, a bank that requires $10,000 minimum is not an option for you, even if their rate looks best on paper.
Key Takeaways
- Your own bank or credit union is the easiest place to open a CD, but online banks typically pay 0.5% to 1.5% higher rates.
- Online banks require you to verify your identity and link a bank account, but the process takes 10 to 20 minutes and happens entirely online.
- Brokerages let you compare and buy CDs from hundreds of banks in one account, which is useful if you want to ladder multiple CDs.
- Check the annual percentage yield (APY) and minimum deposit requirement before comparing rates, because both affect what you actually earn.
- Money market accounts offer a lower rate but no lock-in period, making them useful if you want flexibility while earning interest.
Frequently Asked Questions
Can I buy a CD from a bank I do not have an account with?
Yes. You can open a CD at any bank or credit union, even if you have never banked there before. You will need to provide your Social Security number, verify your identity, and link a bank account to fund the CD. The process takes 10 to 20 minutes online or over the phone.
What is the difference between a CD rate and APY?
The rate is the interest percentage the bank pays. APY is the annual percentage yield, which includes how often the bank compounds interest. APY is always the number you should compare, because it shows what you will actually earn. A CD with a 4.5% APY will earn more than one with a 4.5% rate if the second compounds less frequently.
Is my money safe in an online bank CD?
Yes, as long as the online bank is FDIC-insured. All major online banks (Marcus, Ally, American Express Personal Savings) are FDIC-insured up to $250,000 per account. Check the bank's website or call to confirm FDIC insurance before you deposit money.
Can I sell a CD before it matures?
You can withdraw the money, but you will pay an early withdrawal penalty — usually three to six months of interest. If you buy a CD through a brokerage, you can sometimes sell it on the secondary market instead, which may cost less. Check your bank or brokerage's early withdrawal policy before you open the CD.
Which is better: a bank CD or a Treasury bill?
Bank CDs usually pay higher rates, but Treasury bills are backed by the U.S. government. If safety is your priority and you do not mind a lower rate, Treasuries are a good choice. If you want the highest return on a short-term savings goal, an online bank CD usually wins.