How to Buy a Certificate of Deposit

How to Buy a Certificate of Deposit. Saving money for a house, vehicle or retirement may have you scrambling to find safe and effective means of investing and planning. Purchasing a Certificate of Deposit (CD) has many advantages regardless of what your end goal may be. The following steps will help you learn how to purchase a certificate of deposit.

Shop around. Find out what the rates and terms are from at least three different institutions. Banks and lenders will have rates available upon request.

Decide how long you want to invest the money. The length of investment, or the term, will be up to you to decide. Some CDs can be purchased for only a few months, while some can extend for many years.

Choose the best rate for your desired term. The rates will change depending on how long you plan to keep your money in the CD. The longest term may not always produce the best rate, however. Check with the financial institutions for rates along with the different terms.

Make an appointment with the lender or bank you choose to use to deposit your money. There is necessary paperwork that must be signed to secure your Certificate of Deposit. The representative will go over the details of the transaction, interest paid and any penalties that may occur due to early withdraw.

Sign and deposit. After you understand the terms in the agreement and feel that you have made the best decision for you and your money, just sign the paperwork and deposit you money. The financial institution will send you periodic updates on your CD and notifications near the end of your term.


  • Ask for any specials the financial institution may have. Sometimes there are higher rates of interest for certain CDs. This type of investment can be used as collateral against other loans you may need in the future.

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