Should you have CDs at several banks?

Certificates of deposit or CDs can be used to save for short and long term goals. Opening more than one CD account can make sense if you want to build a CD ladder or if you are saving towards multiple financial goals. You can open all your CDs at the same bank, but opening CDs at several banks is also an option. There are some advantages and disadvantages to keeping CDs at different banks.

Key takeaways

  • A deposit certificate is a time deposit account that allows you to save money and earn interest for a specified term.
  • Opening CDs at several banks can make sense if you shop for the best prices on a proof of deposit.
  • Using multiple banks to hold CD accounts can help you stay within FDIC coverage limits.
  • When you open CDs at different banks, it is important to think about which APY you can earn, the fees you can pay and the term.

What is a Depositary Receipt (CD)?

A deposit certificate or CD is a time deposit account offered by banks, credit unions and other financial institutions. When you open a CD, you agree to leave your money in the account for a certain period of time or term. While your money is in the CD, it can earn interest. When the CD expires, you can roll your first deposit and interest income to a new CD or withdraw the entire amount.

CDs can have different durations. For example, you can open a CD with a term of 28 or 30 days if you only need to save for a short period of time. On the other hand, you can save with a CD that has a 5- or 10-year period if you want to set aside money for long-term goals. Banks and credit unions can CDs can decide what maturities to offer.

Withdrawing money from a CD before it reaches the due date can trigger a penalty for early withdrawal. This penalty can be a fixed fee, although it is more common for banks and financial institutions to assess the penalty as a percentage of interest earned. The penalty amount is usually linked to the CD period.

CD accounts are protected by the Federal Deposit Insurance Corporation when held with an FDIC member bank. Credit unions are insured through the National Credit Union Administration (NCUA). The standard FDIC coverage limit is $ 250,000 per depositor, per account ownership type, per financial institution. NCUA applies similar coverage for CDs to credit unions.


FDIC protection does not cover all CDs, including those held by non-member banks, Yankee CDs, and certain brokered CD accounts.

Should you have CDs at several banks?

There is no rule that prevents you from opening CD accounts with different banks. You are also not limited to the number of CD accounts you can have at any given time. For example, you can open a CD account, a physical bank, another CD at an online bank and another at a credit union.

If you are going to open CDs at more than one bank may depend on your financial goals and needs. It is also important to consider whether it is realistic to open multiple CDs, based on how much money you have to deposit.

Advantages of having CDs at several banks

There are some benefits to opening CDs at multiple banks. You can consider this savings strategy if you:

  • Interested in building a CD ladder
  • Do you want to maximize interest income with CDs
  • Need CDs with varying maturities
  • Are concerned about exceeding the FDIC coverage limits

CD laddering means opening several CD accounts with different maturities and interest rates. A CD ladder can offer flexibility because you can choose the term based on your goals. It is also easier to avoid penalties for early withdrawals with staggered maturities. Finally, step-by-step CDs with multiple bank accounts can help you take advantage of higher interest rates.

Opening CDs at multiple banks can also help ensure that all your money is covered by FDIC protection.

For example, say you have $ 200,000 in your checking and savings accounts at your current bank. You sell your home for a profit of $ 100,000 and decide to park the money on a CD. If you put all $ 100,000 of that on a CD at your current bank, your total deposits would be $ 300,000. Assuming you are the sole owner of these accounts, only $ 250,000 of that money would enjoy FDIC protection; the remaining $ 50,000 would be uninsured.

This can be a problem if your bank fails. However, you can stay within the coverage limits by depositing $ 25,000 on a CD at your current bank and opening one or more CD accounts at another bank with the other $ 75,000.


FDIC offers an online estimation tool that you can use to see how much of your money is protected with each bank you have accounts with.

Disadvantages of opening CDs at several banks

Opening CDs at multiple banks may not be right for everyone. As for the cons, here are some reasons why you might think twice about opening CDs at different banks:

  • Reduced liquidity with your money
  • Possibility of higher fees
  • More challenging to organize and keep track of

When you open CD accounts, banks and credit unions usually have a minimum deposit requirement that you must meet. For example, you may need $ 500 or $ 1000 to open a CD. With a jumbo CD, the minimum deposit can be $ 10,000 or more.

Opening CDs at multiple banks means that you must meet several minimum deposit requirements. It’s not necessarily a bad thing if you have lots of other liquid cash available in an emergency fund or other savings account. But if you spend all your money on CDs, it limits your liquidity.

If you need money for an unexpected expense, you may have to remove one or more of your CDs prematurely. It can trigger multiple penalties for early withdrawals, which shrinks your interest income.

Apart from these considerations, having multiple CDs at different banks can make it harder to keep track of your savings. If you do not have an organized system for managing financial accounts, you may not know exactly when CDs are set to mature. This can make it more difficult to plan withdrawals from CD accounts.


Many banks and credit unions automatically roll over CDs on the due date unless you indicate that you want to withdraw the money.

Can you open CDs at several banks?

You can open several CD accounts at different banks; there are no limits to how many CDs you can have. However, it is important to remember that you must be able to meet the minimum deposit requirements for each CD. Each bank can set different requirements for the minimum CD deposits.

What is a good number of CDs to have?

The ideal number of CDs to have may depend on your financial goals. For example, you can open a CD to save money to buy a car and another CD to save money for a down payment on a home. You can also open CD accounts to save for other purposes, such as college or retirement.

What is a CD ladder?

A CD ladder is a savings strategy that involves opening several CD accounts with different maturities and interest rates. You can build a CD ladder with CDs at the same bank or at different banks.


Opening CDs at multiple banks is a personal decision and it is important to research CD options carefully. Take the time to compare the best CD rates to see which banks or credit unions pay the most interest. Also consider the term and minimum deposit requirements for each CD you are considering opening.

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