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.