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How to Open a CD Account in 5 Steps
Pick your CD, apply, fill out personal information, choose how you’ll receive interest and add money.
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NerdWallet's content is fact-checked for accuracy, timeliness and relevance. It undergoes a thorough review process involving writers and editors to ensure the information is as clear and complete as possible.
Spencer Tierney is a consumer banking writer at NerdWallet. He has covered personal finance since 2013, with a focus on certificates of deposit and other banking-related topics. His work has been featured by The Washington Post, USA Today, The Associated Press and the Los Angeles Times, among others. He is based in Oakland, California.
Sara Clarke is a former Banking editor at NerdWallet. She has been an editor and project manager in newsrooms for two decades, most recently at U.S. News & World Report. She managed projects such as the U.S. News education rankings and the Best States rankings. Sara has appeared on SiriusXM Business Radio and iHeartMedia’s WHO Newsradio and has been quoted in The Salt Lake Tribune, The St. Paul (Minnesota) Pioneer Press and other outlets. She is based near Washington, D.C.
Opening a certificate of deposit is a solid way to get guaranteed returns on your money with little risk. CDs tend to have the highest interest rates among bank accounts and are federally insured, unlike investments kept in stocks and bonds. Here’s a step-by-step guide to opening a CD.
1. Find a CD that’s right for you
A good starting point is to compare CD interest rates online across federally insured banks and credit unions and keep three other factors in mind: CD term, CD type and who owns the CD.
CD terms generally range from three months to five years, so decide how long you want to lock up your money. (See how to choose a CD term.)
CD types vary, but regular CDs are the most common. You might have to seek out no-penalty or add-on CDs since not all banks offer them. (Learn about nine types of CDs.)
Single or joint account. As with other bank accounts, you can open a CD by yourself or with someone else, such as a spouse. Note that the insurance limit for the Federal Deposit Insurance Corp. (for banks) and National Credit Union Administration (for credit unions) is generally $250,000 per person, and it’s doubled for joint accounts
Federal Deposit Insurance Corp. Joint Accounts. Accessed Jul 14, 2025.
4.25%Annual Percentage Yield (APY) is accurate as of 01/09/2025. APY may change at any time before or after the account is opened. Available only online.
5.00%Annual Percentage Yield (APY) is accurate as of June 17th, 2025. Start earning 2.50% APY, then qualify to earn 5.00% APY on your balance up to $5,000.00 and 2.50% APY on balances over $5,000 next month by 1) Receiving direct deposit(s) totaling $1,000 or more; and 2) Ending the month with a positive balance in all your Varo Accounts. No fees, no minimums required. Rates subject to change at any time.
4.00%Annual Percentage Yield (APY) may change at any time and fees may reduce earnings. Please visit etrade.com/ratesheet for more information.
Min. balance for APY
$0
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.
Up to 4.50%The Base Annual Percentage Yield (APY) is 4.00% as of 06/30/25, but is variable and is subject to change. If you are eligible for the overall boosted rate of 4.50% offered in connection with this promo, your boosted rate is also subject to change if the base rate decreases during the three-month promotional period. This limited-time promo offers eligible new Wealthfront clients a 0.50% APY increase over the standard variable base APY for 3 months on up to $250K in their personal Cash Accounts. Cash Account offered by Wealthfront Brokerage LLC, Member FINRA/SIPC, and is not a bank. APY (is representative, requires no minimum) is paid from our Program Banks.
4.65%Cash Reserve offered by Betterment LLC and requires a Betterment Securities brokerage account. Betterment is not a bank. Learn More (https://www.betterment.com/cash-portfolio). Annual percentage yield (variable) is 4.00% as of 12/27/24, plus a 0.65% boost (“APY Boost”) for new clients with a qualifying deposit. $10 min deposit for base APY. Terms apply (betterment.com/boost); if the base APY changes, the Boosted APY will change. FDIC insurance provided by Program Banks (https://www.betterment.com/cash-portfolio), subject to certain conditions.
2.00%Annual Percentage Yield (APY). APY may change at any time and fees may reduce earnings. Please visit etrade.com/ratesheet for more information. The $15 monthly account fee can be waived when you maintain an average monthly balance of at least $5,000 in the account on or after the end of the second calendar month from opening the account.
Monthly fee
$15
Money market accounts pay rates similar to savings accounts and have some checking features.
Money market accounts pay rates similar to savings accounts and have some checking features.
Depending on the bank, you can open a CD online, over the phone or in person at a branch. Some banks encourage you to apply online, and others require that you visit a branch. If you’re able to apply online, the application process can take a few minutes, though this may vary. If you’re an existing customer, the process can be easier. But if you’re missing any required information, you might need to finish the process in person if the bank has a branch network.
3. Have your identification ready
Expect to give one or two forms of ID, plus your residential address — which usually has to be in the U.S. — and contact information, including a phone number and email address.
4. Choose how you want interest disbursed
Many financial institutions offer two options: receive all interest at the end of a CD’s term, which is more common, or disburse interest as regular payments, such as monthly or annually. If you want to maximize interest by compounding, opt to receive it at the end.
5. Make the opening (and only) deposit
Unlike with a savings account, you generally won’t be able to add money to a CD more than once. You’ll put down a set amount and leave it untouched until your CD’s term ends. Funding methods can include linking to another bank account and transferring money, mailing a check or depositing a check when opening a CD at a branch.
» Ready to compare? Check out NerdWallet’s list of the best CD rates this month
Frequently asked questions
Can you add money to a CD?
In most cases, opening and funding a CD with an initial deposit is the only time you can add money to a CD. Additional contributions aren’t commonly allowed for CDs. Exceptions would be opening an add-on CD, which is a rare offering across banks and credit unions, or opening a CD where you may be able to make multiple deposits for the first month or so.
What is a CD’s opening minimum requirement?
This is the same as the minimum balance or opening minimum amount and varies by bank and credit union, ranging typically from $0 to $10,000. At some institutions, there are jumbo CDs with marginally higher rates (compared with other CDs at the same bank) but minimums such as $100,000.
Do CDs have fees?
CDs have one type of fee, an early withdrawal penalty, that only occurs if you cash out a CD before the term ends.
Are CDs FDIC insured?
Yes, CDs are federally insured up to the maximum, $250,000 per account holder, per bank and per ownership category (such as single-owned and joint accounts). Learn more about how CDs are safe.
What are share certificates?
Share certificates, or certificates, are the credit union equivalent of CDs. A credit union is a not-for-profit banking institution where customers are technically part owners. Owning part of a company means owning shares, hence the use of the word “share” at a credit union. Regular savings accounts are often called share accounts.
Can you add money to a CD?
In most cases, opening and funding a CD with an initial deposit is the only time you can add money to a CD. Additional contributions aren’t commonly allowed for CDs. Exceptions would be opening an add-on CD, which is a rare offering across banks and credit unions, or opening a CD where you may be able to make multiple deposits for the first month or so.
What is a CD’s opening minimum requirement?
This is the same as the minimum balance or opening minimum amount and varies by bank and credit union, ranging typically from $0 to $10,000. At some institutions, there are
with marginally higher rates (compared with other CDs at the same bank) but minimums such as $100,000.
Do CDs have fees?
CDs have one type of fee, an early withdrawal penalty, that only occurs if you cash out a CD before the term ends.
Are CDs FDIC insured?
Yes, CDs are federally insured up to the maximum, $250,000 per account holder, per bank and per ownership category (such as single-owned and joint accounts). Learn more about
Share certificates, or certificates, are the credit union equivalent of CDs. A credit union is a not-for-profit banking institution where customers are technically part owners. Owning part of a company means owning shares, hence the use of the word “share” at a credit union. Regular savings accounts are often called share accounts.
🤓Nerdy Tip
Flipping the traditional trend, rates on one-year CDs lately have been higher than those on five-year CDs.
Additional tips for opening a CD
Look at annual percentage yield, not interest rate, when comparing rates. APY shows the interest earned including compound interest; an interest rate doesn’t include compounding, which factors in the initial deposit plus previous interest earned into the CD
If you choose a credit union, you’ll have to become a member first. Credit unions, the not-for-profit equivalent of banks, require membership to open an account. To be eligible for membership, you might have to live in a specific geographic area, have a certain employer or make a small donation to an affiliated nonprofit organization, among other things. You also generally must open a regular savings account (or “share account”) with a minimum deposit, which can be $5, as a membership requirement.
Deciding the right amount for a CD or CDs depends on your goals. On the lower end, CDs have a minimum deposit requirement, which typically ranges from $0 to $10,000. CDs are federally insured up to $250,000 per account holder (excluding CDs as trusts or joint accounts). Learn more about how much to put into CDs.
Your CD’s rate stays constant. Unlike a regular savings account, a CD has a fixed rate once you fund it. (Two exceptions are step-up and bump-up CDs.) Banks and credit unions change their rates on new CD offerings in response to changes from the Federal Reserve’s rate, among other factors. (Learn more about the role of the Fed in our explainer on how Fed rate increases affect CDs.)
Know what your CD’s early withdrawal penalty is. Ideally, you won’t need to break the seal on your CD before it matures, but if you do, know what it will cost you. Most CDs have a penalty of several months’ to a year’s worth of interest. (See penalties at various banks.)
Create a reminder for the CD’s maturity date. Typically, there’s a short window of seven to 10 days after the CD’s term ends for you to get your money back penalty-free. Otherwise, your CD may automatically renew for the same term but with a new rate, which will likely match what the bank is offering on new CDs of that or a similar term. Explore the next steps for when a CD matures.
If you're worried about missing higher rates later, consider a CD ladder. When rates are low or on the rise, a CD ladder might be a good option. You open several CDs of different terms — say, one year, two years and three years — and each time one CD matures, put the money into a new long-term CD. Or you can withdraw after a CD term ends. The strategy gives you regular access to part of your CD funds and lets you take advantage of higher rates.
