Is it best to open a CD account through a bank or somewhere else?

Question

What is a good financial institution to open a CD account through? With fair to good interest rates?

I was offered an invitation from Wells Fargo but I wasn't sure if there was someplace else having never opened a cd account in the past?

Answer 1

You can buy a Certificate of Deposit (CD) through a local bank, online, or through a brokerage.  There are advantages and disadvantages to each.

A bank like the one you mention, or another local bank, will offer you the rates they choose, and *might* match the rate of another bank if the amount you want to put in the CD is large enough.  You can work with them face-to-face and you might personally know the bank representative.

Online CD purchases are fairly similar, except for the lack of face-to-face contact and the fact that some people worry about online fraud.  There is no need to travel away from  your computer to make the purchase.

A brokerage--such as an investment firm like Smith Barney, Morgan Stanley, Merrill Lynch--can facilitate the purchase of CD from banks all over the country.  Often the rates are among the best available because they offer CDs from all over the country.  You can work with them over the phone or in person.  

All three options offer advantages and disadvantages.  When you speak with a representative (or type your questions online), be sure to inquire about CD terms available (3 months, 6 months, 1 year, etc.); any fees to open the account; any fees to maintain the account; any fees to buy a CD; how you are informed with the CD matures; what your options are for renewing the CD; and what your options are if you need your money before the CD matures (in this case, some institutions will keep any interest you've earned; some will charge you a penalty; and some will sell the CD for you at market rates.

Hope this helps.  Good luck!

Answer 2

Look online for the best interest rate.  Most financial institutions are paying less than 2%.