How to Buy a Certificate of Deposit Online

Certificates of deposit can be bought online easily. You can also comparison-shop to find a good rate. Terms will vary, from three months to five years, with a set interest rate that's determined by the length of the term. Banks insure CDs through the Federal Deposit Insurance Corp. (FDIC), while credit unions insure them through the National Credit Union Share Insurance Fund. As a result, CDs are one of the safer investments.

Things You'll Need

• Computer with Internet access

Instructions

1. Use websites to find a financial institution that offers CDs with good rates. The most popular and helpful sites are Bankaholic.com, Bankrate.com and Verybestcdrates.com (see References and Resources). If you go to Bankrate.com, simply select the CD and investments tab at the top of the web page. Compare rates by trying out the comparison tools and investment calculators. The articles are useful as well.

2. Determine how much you want to invest and how long your funds will be deposited. By depositing a large amount, you could receive a jumbo rate that will be considerably higher than the usual rate. Decide how long you want to tie up your funds and when you will need to withdraw them. CD terms are usually three, six and 12 months and five years. Remember that you could face penalties and lose interest for withdrawing the funds before the maturity date.

3. Choose a financial provider, such as a bank, credit union or other financial institution. Consider costs, account features, access to funds and online capability. The fees can eat away at the interest you earn, so research the fees first. Then ask other questions. What benefits are you getting? How quickly and easily can you access your money? How user-friendly is the website? Is customer service readily available, professional and helpful?

4. Open an account on the financial provider's website. If you are not an existing customer, register on the site, log in and follow the instructions for opening an account. You will probably need your Social Security number and bank account information. There should be a phone number to get assistance with CD purchasing. You may be required to complete or sign additional forms, depending on the institution.

Tips & Warnings

• All certificates of deposit are not FDIC insured. Always inquire about insurance.

References

• Bankaholic.com: CD Rates
• Verybestcdrates.com
• "The Wall Street Journal Lifetime Guide to Money," the Wall Street Journal Finance Staff; Dow Jones and Co., 1997

Resources

• Bankrate.com