When it comes to opening a certificate of deposit (CD), many people automatically turn to their local bank or credit union. It’s familiar, convenient, and feels secure. But in today’s digital world, limiting yourself to local financial institutions could mean missing out on better rates. Here’s why it’s often worth looking beyond your zip code when opening a CD.
Higher Rates Are Just a Click Away
One of the biggest advantages of considering out-of-state banks is access to higher interest rates. CD rates are influenced by the Federal Reserve, of course, but also by competitive forces within a geographic market. Financial institutions competing for funds can temporarily raise rates to win deposits, and you can reap the rewards of that. Online-only banks can offer higher rates, as they don’t have a costly branch network to support. Even a small bump in APY can make a noticeable difference in your return, especially if you’re locking in funds for a year or more.
Your Money Is Still Protected
Many people hesitate to open accounts with financial institutions they’re unfamiliar with. But if the bank or credit union is FDIC- or NCUA-insured, your deposit is protected up to $250,000 per depositor, per institution, per account category. That means your money is just as safe in a CD from a bank or credit union in another state as it is at the one down the street.
Digital Convenience Is the New Standard
Thanks to online banking, you can easily open, fund, and manage a CD without ever stepping into a branch. Most banks and credit unions, especially online ones, have user-friendly websites and apps that allow you to monitor your account, receive notifications, and transfer funds when your CD matures.
If this sounds uncomfortable to you, call Customer Service to make a personal connection with the bank or credit union. Research Google Reviews or other online consumer feedback to learn about its reputation and track record. Check their Bauer Rating to understand their financial strength. Your confidence in the institution is as important as convenience.
More Options, More Flexibility
Looking out of state opens the door to a wider variety of CD terms, features, and benefits. Some financial institutions may offer unique products like no-penalty CDs, bump-up CDs, or high-yield promotional offers that your local bank or credit union may not provide. By expanding your search, you’re more likely to find a product that aligns with your financial goals and timeline.
Perfect for Long-Term Parking
If your primary goal is to lock up savings safely for a fixed period and earn a guaranteed return, it doesn’t matter where the bank is located. You won’t need frequent access, and account management can typically be handled entirely online or over the phone. This makes out-of-state CDs ideal for long-term savers who are more focused on yield than proximity.
Let the Best Bank Win
When choosing a CD, think beyond location. Compare rates, terms, and account features across a wide range of institutions on an online marketplace like CD Valet. You may find that the best option isn’t around the corner, but it’s still right at your fingertips. With a bit of research and the right tools, opening a CD at an out-of-state bank or credit union can be a smart move that helps your savings grow faster.
