About Ken Tumin

Ken Tumin founded the Bank Deals Blog in 2005 and has been passionately covering the best deposit deals ever since. He is frequently referenced by The New York Times, The Wall Street Journal, and other publications as a top expert, but he is first and foremost a fellow deal seeker and member of the wonderful community of savers that frequents DepositAccounts.

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Best Way to Open a CD: Branch or Online?

As you can see in my recent survey of the best local CD rates, you can often find higher CD rates at a local bank or credit union. What if the rate is about the same as what you can get online? Do you prefer to open a CD at a branch of a local bank or credit union? Or do you prefer to open a CD online? That's the question of my poll for today.

I know some people who only open accounts at their local banks and credit unions. Others might be willing to go online if they can get a higher rate. While others might like the convenience of the internet so much that it would take a hot local deal for them to go to a branch. Which category do you fall in? If you're in the middle, how much higher of a rate does an internet bank have to offer?

Opening a CD at a local bank or credit union has some advantages. If it's a short drive, the process can be quicker. You can fund the CD with a check which can be deposited immediately by the bank representative. You don't have to worry about the check being lost in the mail or worry that the rate will fall before the check arrives. Opening a CD online can be easier if you use an ACH transfer, but there's still some delay with ACH transfers.

Another advantage with opening a CD at a bank branch is that you can ensure the documentation is done correctly. For example, banks often don't title the accounts properly when there are beneficiaries (if you're concerned about maximizing your FDIC coverage).

There are also some benefits like supporting your local community bank or credit union and the assurance you get by physically meeting your bank representative.

In my opinion, the main reason to open a CD online is a higher rate. The internet gives us access to banks and credit unions around the nation which increases competition and gives us more choices. Some banks and credit unions make it easy to open CDs online, but some of those with the best rates don't make it easy, at least for new customers. You might be required to mail in signature cards and copies of your ID. For credit unions, you first have to become a member and open a savings account. Not all credit unions make it easy to open a CD at the same time you join.

If you're opening a CD at a credit union that doesn't have its own ACH transfer service, you may want to push funds into your credit union savings account via an internet bank. Once its in the savings account, you can usually open the CD online or by phone and use the savings account to fund the CD.

Related Pages: CD rates

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  |     |   Comment #1
Please note that 1st Commonwealth Bank of Va has lowered the Interest Rate from 3.96% to 2.96% on its Reward Checking  Account effective April 25th 2011.  They have not posted the new lower Rate on their Website.
  |     |   Comment #2
If they haven't posted it on their website, how do you know? Do you have inside knowledge?
  |     |   Comment #3
One thing to keep in mind: CD's are sometimes negotiable. Your small/medium local bank may be willing to match another offer or at least work with you to keep your business, especially if you have a checking account, loan, or another product with them. 

One of my favorite local banks has a "Best Rate Guarantee", just bring in the advertisement from another local bank and they'll match it. One time they even matched a out-of-state rate, once they didn't but offered 0.25% more than their posted rate. They even do CDARS for those with big CD's. CDARS is the easier way of increasing your FDIC insurance limits, but that's probably worthy of a separate posting. :-)
  |     |   Comment #4
I will only open CD's online. This way I know if there is a mistake made, it is my fault. The local bankers ALWAYS make some sort of mistake with me. I always catch it but why can't they just spend a little extra time and do it right? When it is just me and the PC, I know I am mistake free. If not, I have no one to blame but myself.
  |     |   Comment #5
To #4:  I agree!  I like to be in as much control as I can when it comes to my own finances.  I am sure the vast majority of people who work at banks are very competent but I have had to deal with a handful who obviously had very little clue as to what they were doing (and I am not talking about people who are new and being trained).  I will certainly consult with a live person if I have any doubts about what I am doing.  Otherwise, I mudh prefer to do things myself.  I can open a CD online much faster than live bank employees seem to be able to manage and so far I have not made a mistake (Knock on wood!). 
  |     |   Comment #6
I have removed most of my money from the internet. My local bank gave me about 30% more than I was geting on the internet. A few years ago it was the other way around.
  |     |   Comment #7
Unfortunately, these days of low rates, I have not been able to find a local bank which will give me a higher rate or even a 2% 5 year CD.  Many years ago (before the rate crash) banks seem to be in more competition with each other for depositor's money.  They sure have a different attitude now!

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