To put money in a CD, you open the account with a bank or credit union, pick a term, and transfer your deposit by ACH, wire, internal transfer, or check. The whole application runs about 10 to 15 minutes online or at a branch. The rate locks once your deposit clears, so the decisions that matter (term length, amount, and funding method) happen before you click submit.
Pick Your Term and Deposit Amount First
CD terms run from as short as 28 days to as long as 10 years, with most people choosing something between six months and five years. Longer terms usually pay higher rates because the bank gets to hold your money longer. Shorter terms pay less but free up your cash sooner. Choose based on when you actually expect to need the money back, not on which rate looks best on the page.
Minimum deposits vary. Some online banks accept any amount. Traditional brick-and-mortar banks often start at $500 or $1,000. Jumbo CDs generally require $100,000 or more in exchange for a slightly better rate. If you want the option to pull funds out before maturity without losing interest, look at a no-penalty CD (sometimes called a liquid CD); the rate is lower than a standard CD of the same length, and that’s the trade.
IRA CDs are also available at many institutions. They function like regular CDs, but the interest grows tax-deferred in a traditional IRA or tax-free in a Roth IRA.
What You Need to Apply
Federal anti-money-laundering rules require the bank or credit union to verify your identity before opening any deposit account. Under the Customer Identification Program, the institution has to collect your full legal name, date of birth, physical address, and an identification number (a Social Security number or an Individual Taxpayer Identification Number).1eCFR. 31 CFR 1020.220 – Customer Identification Program Requirements for Banks You’ll also need an unexpired government-issued photo ID such as a driver’s license or passport.
Because a CD earns interest, that Social Security number or ITIN isn’t optional for tax reporting. Some institutions will only open non-interest-bearing accounts for applicants who can’t provide one, which defeats the point.2Consumer Financial Protection Bureau. Checklist for Opening a Bank or Credit Union Account Have your funding source ready too: the routing number and account number of the bank you’re pulling from, or a check if that’s how you plan to deposit.
Submitting the Application
Most banks let you open a CD entirely online. You fill in your personal information, choose the term and deposit amount, and step through a few confirmation screens. The bank usually issues your new account number within minutes.
If you’d rather do it in person, bring your photo ID to a branch. A bank officer enters your information, verifies your identity, and opens the account while you’re there. In-branch is worth the trip if you have questions about specific terms or want to negotiate a rate on a large deposit. The end product is the same account either way.
Moving the Money In
Once the account is open, you fund it. Four methods are standard, and the right one depends on where the money is sitting now.
- ACH transfer. The most common option. You enter the nine-digit routing number and account number from your external bank into the CD bank’s funding interface. ACH is free, and it typically takes one to three business days to settle.
- Internal transfer. If you already have a checking or savings account at the same institution, you can move money instantly through the online banking dashboard. Fastest option available.
- Wire transfer. Faster than ACH, but not free. Domestic outgoing wire fees at major banks run $20 to $35, and the receiving bank may add $15 to $20. Wires make sense for very large deposits when you want same-day settlement.
- Check deposit. You can mail or bring a personal check. Endorse the back and write the new CD account number in the memo line so it routes correctly. Allow extra time for the check to clear before your rate locks.
The rate locks when the deposit clears, not when you submit the application. If rates are moving and timing matters, an internal transfer or a wire gets the money in fastest.
Understand the Early Withdrawal Penalty Before You Commit
Pulling money out of a CD before it matures costs you. Federal rules require banks to impose an early withdrawal penalty, and Regulation DD (Truth in Savings) requires them to disclose the exact calculation before you open the account.3eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) The dollar amount varies by institution and term, but a common structure looks like this:
- CDs of 12 months or less: 60 to 90 days of interest forfeited.
- CDs of one to three years: 90 to 180 days of interest forfeited.
- CDs of five years or more: 150 days to a full year of interest forfeited.
On a longer-term CD, an early withdrawal can wipe out months of earnings and eat into your principal if you haven’t held the CD long enough to accumulate interest to cover the penalty. Be honest with yourself about when you’ll need the money before choosing a term. If there’s any doubt, a shorter term or a no-penalty CD is safer.
Check the Deposit Insurance Limit Before You Deposit
CDs at FDIC-insured banks are protected up to $250,000 per depositor, per bank, for each ownership category.4FDIC. Understanding Deposit Insurance Federally insured credit unions offer the same $250,000 coverage per member-owner through the National Credit Union Share Insurance Fund.5National Credit Union Administration. Share Insurance Coverage
The limit applies to your combined deposits at a single institution, not per account. If you already hold $200,000 in a savings account at a bank and you open a $100,000 CD there, $50,000 of that CD sits above the ceiling. Joint accounts, revocable trust accounts, and IRA accounts count as separate ownership categories, which can raise your total insured amount at the same bank if you hold accounts across categories. Worth a quick check before funding a jumbo CD.
After the Money Is In
Your bank has to send you written notice before the CD matures, and that notice will say whether the CD will renew automatically.6Consumer Financial Protection Bureau. What Is a Certificate of Deposit (CD) Rollover or Renewal? Auto-renewal is the default at most banks. If you do nothing, your balance rolls into a new CD of the same term at whatever rate the bank offers that day. After maturity, you typically have a grace period of seven to ten days to withdraw or change instructions without penalty.3eCFR. 12 CFR Part 1030 – Truth in Savings (Regulation DD) Miss that window and the money is locked into the new term with a fresh penalty attached. Set a calendar reminder a week before maturity.
Interest on a standard CD is taxable as ordinary income in the year it becomes available to you, even for a multi-year CD whose principal is still locked up.7Internal Revenue Service. Topic No. 403, Interest Received If the CD earns $10 or more in a year, the bank sends you a Form 1099-INT and files a copy with the IRS.8Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID You report the interest either way. Inside a traditional IRA, the interest is tax-deferred until you take distributions; inside a Roth IRA, it’s tax-free if you meet the withdrawal requirements.