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How to Open a Certificate of Deposit (CD) – Investopedia

Matt Webber is an experienced personal finance writer, researcher, and editor. He has published widely on personal finance, marketing, and the impact of technology on contemporary arts and culture.
Katie Miller is a consumer financial services expert. She worked for almost two decades as an executive, leading multi-billion dollar mortgage, credit card, and savings portfolios with operations worldwide and a unique focus on the consumer. Her mortgage expertise was honed post-2008 crisis as she implemented the significant changes resulting from Dodd-Frank required regulations.
Certificates of deposit (CDs) are widely available and easy to buy. You can open a CD online in a matter of minutes or in person at almost any bank or at your credit union. However, there are a number of things to consider before you commit.
Though opening a CD can be quick, you'll still want to take a little time to make sure you're getting the right one. Here are five steps to finding the perfect CD.
The most important factors to consider when making this decision are:
If you've decided on these key factors, you can start shopping around for the CD that best suits your needs.
When you’ve decided on the type and length of CD and the kind of account you want, you can look for a bank or credit union that offers it. You will have plenty of options. Investopedia’s regularly updated list of Best Bank CD Rates is based on some 200 financial institutions that sell CDs.
There are three key factors to consider at this stage, listed here in decreasing order of importance:
Consider splitting your money among several CDs with different maturities. The longer-term CDs will earn a higher interest rate, while the shorter-term CDs will be more readily available in case of need.
Having decided on the CD you want and picked a provider, you're ready to apply. The process of opening a CD is straightforward. With many banks and credit unions, you can do it entirely online.
However you apply, you'll be asked for some basic information—your address and contact details, for example. You may have to show an ID if you don't already have an account at that financial institution.
During the sign-up process, you'll have one more important decision to make if you haven't already done so: How do you want to receive your interest? 
Many financial institutions offer two options here. You can collect all of the interest at the end of a CD's term or receive it in periodic disbursements, such as monthly or annually. If you want to maximize your total interest, opt to receive it at the end. If you'd prefer a regular cash flow from your CD, arrange for disbursements.
Finally, you'll need to fund the CD. You'll only do this once. Unlike savings accounts, CDs generally don't allow you to make additional deposits.
You can fund your CD with an online or phone transfer from another account or by mailing a check.
At the end of your CD’s term, you’ll have several options for getting your money out or investing it in a new CD.
It depends. Certificates of deposit are useful in a few different situations. Perhaps you have cash you don't need now but will want within a year or a few years. A CD with an appropriate term would be a good way to earn a little more interest on that money while keeping it safe.
CDs also are a good choice for risk-averse investors who don't want to take a chance on more volatile investments such as stocks.
Virtually every bank and credit union offers at least one certificate of deposit, and most have a wide array of them. So not only is your local brick-and-mortar bank an option but so is every other bank or credit union in your community.
Most online banks and regular banks with an online presence also sell CDs. Still another option is buying a brokered CD through a brokerage firm or an independent sales representative.
That depends on how soon you need to get your money back. If you are saving for a specific goal or project, the expected start of that project can help you determine your maximum CD term. On the other hand, if you're just socking away cash, you might opt for a longer-term CD to maximize your interest rate.
Opening a certificate of deposit (CD) is easy, and choices are plentiful. Because interest rates can vary widely from one financial institution to another, it pays to shop around.
But even before that, it's good to have a basic idea of the kind of CD you want and for how long you are comfortable having your money tied up in it.
National Credit Union Administration. "Share Insurance Fund Overview."
Federal Deposit Insurance Corporation. "Are My Deposit Accounts Insured by the FDIC?," Select "Individual Accounts" and "Joint Accounts."
FDIC. “Deposit Insurance FAQs.”
Office of the Comptroller of the Currency. "What Are the Penalties for Withdrawing Money Early from a Certificate of Deposit (CD)?"
Financial Industry Regulatory Authority. "Certificates of Deposit (CDs)."
Certificate of Deposits (CDs)
Certificate of Deposits (CDs)
Certificate of Deposits (CDs)
Certificate of Deposits (CDs)
Certificate of Deposits (CDs)
Certificate of Deposits (CDs)
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