CD Account Requirments: What Do You Need to Open a CD?
Many investors consider opening CD accounts because these investment types are reliable and safe. CD accounts are great for investors who want to expand their current retirement portfolios. Many may think that opening CD accounts is a difficult task, but it isn’t. Investors only need to provide a few pieces of personal information, and the CD account is open. Opening a new CD account is fun and exciting because it is the beginning of saving for the investors’ future.
List of Requirements to Open a Certificate of Deposit CD Account
- CD Application – Bank and credit union customers must begin their process by completing an application. The applications vary by financial institution. The application may contain such information as name, address, driver’s license number, and telephone number. The application may also contain information regarding emergency contacts, beneficiaries, and employee contact information. Online applications may require additional information since the customers are not opening the accounts in person.
- Personal Documents – Opening an account in person may require a copy of a driver’s license and social security card. The banks and credit unions use this information to verify the person opening the account is who they say they are. Online accounts may only require that investors note their driver’s license and social security number when setting up the account.
- CD Fees – Some financial institutions may charge investors a small fee to open CD account. It may be able to be deducted from the original deposit of the customers—unless the deduction makes the deposit less than the minimum deposit required. Not all financial institutions charge cd fees to open accounts so customers must verify this information before opening accounts.
The list of requirements varies by financial institution. It is important to contact the financial institution so that investors have all of the required information available at the time they decide to open the CD accounts.
Certificate of Deposit Investment Tips
- Do as much research as possible before investing in CDs. Research is important to find the best interest rates and terms. Great rates and terms are available through credit unions and banks everywhere. Investors are not just obligated to research CDs at local banks. The Internet also offers many great financial institutions that are willing to offer great deals on CDs to new customers. Investors should not just settle for the first rate that they receive. When investors do their research before they discuss CDs with bank officials, they put themselves in a position in which they cannot be take advantage.
- Do evaluate personal needs before investing. CDs come in short-term and long-term options. Knowing what current financial needs are can help investors decide which option is best for them. Investors must look at their current assets and their current debts to decide which terms are appropriate. Unless investors have available emergency cash for unexpected situations, they may have to rely on the money from their CDs sooner than they expect. Withdrawing money from CDs before maturity is very expensive. Some investors not only have to give up interest, but they also have to give up some of their principle investment. Evaluating personal needs before opening CDs can save investor a great deal of money.
- Do make multiple investments. Investors can receive the greatest benefit from investing in CDs by investing in different CDs at different terms. Investing in this manner allows investors to make more money and benefit from rate increases. For example, investing in a 6-month CD and a 5-year CD may help investors benefit from rate increases and more interest. The short-term CD can benefit from rate increases at maturity, and the long-term CD can earn more interest until maturity. Some investors try an investment type call laddering. Laddering allows investors to have multiple interest rates and terms. For example, investors can take a $5,000 investment and ladder it into a 6-month investment of $1,000 at 0.75% interest, a 1-year investment of $1,000 at 1.25% interest, a 2-year investment of $1,000 at 1.75% interest, and a $2,000 investment at 2.50% interest. Investors have money available more often than they would with traditional CDs. Laddering investments also reduced the likelihood of receiving penalties for early withdrawal since investors will not likely need to withdraw money with this option.
Investors only have a few easy steps to follow to open CD accounts. Investing in CDs is a very important move that can help secure financial futures. Investors should know a great deal of information about CDs before they open accounts. It is the only way that investors can earn the highest amount of money on their investments.