How do I Open a Certificate of Deposit Account?

A certificate of deposit account, also called a CD account, is a common tool used by individuals and businesses to save money over a fixed period of time at a fixed interest rate. First, you should decide on the term of the account—usually three months or longer. If you and your partner are unsure about the risks of investing your money at this time but still want to earn interest, a CD could be just the solution you've been looking for.

Step 1

Select a bank that offers CD accounts. Check with your current bank and other local banks as well as online banks. Shop around and look for the ones that offer the highest interest rates (annual percentage yield or APY).

Step 2

Determine the length of time you want to keep your CD account open. Review the fixed interest rate associated with that account option (it may vary depending on the term). Generally, the longer the term, the higher the rate.

Step 3

Plug your term, interest rate and the initial amount you plan to deposit into a CD calculator to determine how much you will have saved at maturity (the end of the term). Some banks may also allow you to deposit additional funds to your CD account over time.

Step 4

Fill out account paperwork to establish the account. It's similar to opening a standard savings account—you must provide your Social Security number, date of birth, name and address among other details. Some banks allow you to open the account online instead of visiting a physical location.

Step 5

Place the initial deposit into your new CD account at your bank. If you established an online account, you can add information from an existing checking account and transfer funds to the certificate of deposit account from your computer.

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