How Much Money Can You Put in a CD Account?

A traditional certificate of deposit (CD) offers a higher interest rate than you’d typically find in a savings account. This interest is in exchange for leaving your deposit in the CD for an established time period, such as five months or five years. A CD’s benefits include a predictable return and insurance by the federal government for up to $250,000. 

But even if your deposit partially or entirely insured, is it a good idea to put thousands or millions into a CD? Will a bank allow you to do so? Before you dump your life’s savings into a CD, consider how much money you can put in a CD and develop a strategy to grow your funds. 

Maximum CD Deposit Amounts

Each financial institution will have its own rules about maximum CD limits, account limits, and deposits. Banks and credit unions can set a variety of limits for CDs or your accounts, including:

• Per CD account: For example, no more than $1 million to $99.99 million in a CD 
• Per CD account type: For example, no more than $1 million in a high-deposit or jumbo CD, or no more than $8 million in a CD for three, six, or 12 months
• Cash across accounts: For example, no more than $3 million across checking, savings, and CDs.  
• Per funding approach: For example, you might be limited to $250,000 or $350,000 if you fund your CD by electronic transfer or enroll online, or $2 million if you fund with a check. 

CD Deposit Insurance

However, even if a financial institution doesn’t set a limit for your CD, it’s wise to consider federal insurance limitations. Generally speaking, like other deposits at a bank, the FDIC insures your CDs for up to $250,000. Deposits at federally insured credit unions are insured for up to $250,000 by the National Credit Union Administration. These limits are per account type—so if you as an individual have a CD and a checking account that add up to $270,000, then $20,000 is likely not covered because it exceeds the $250,000 limit. 

You can maximize federal insurance coverage with large amounts of cash in one of two ways:

• Different bank accounts: The simplest method is buying various best-rate CDs across different banks or financial institutions. Each bank, in theory, has insurance coverage up to $250,000. So you could have an insured $250,000 CD in ABC Bank and another $250,000 CD insured at XYZ Bank.
• Different account owners: You can use more sophisticated methods to create different ownership types. For example, you could put some CDs in revocable trust accounts, retirement accounts, or corporation accounts, as a few examples. Each account type can benefit from coverage up to the FDIC insurance limits of $250,000. However, trust or other account types may require more paperwork to establish, and the tax implications and terms are much more complex than CDs. 

Options for Investing a Lot of Money In CDs

If you want to invest in a certificate of deposit, here are some options to consider.

Jumbo CD

A jumbo CD requires a much larger minimum deposit than a standard CD, such as $100,000 or more. It has two primary advantages: it’s low-risk and it typically (but not always) pays a higher return than a standard CD. A disadvantage is that your money is relatively inaccessible until the CD matures. Also, while the interest rates on jumbo CDs are higher than those paid on standard CDs, they are still are relatively low compared—0.40%-0.50% APY, for example—to the returns you may get from stocks or a fund.

Brokered CD

Brokered CDs are issued by banks but purchased through investment brokerages. A brokerage firm buys a large “master” CD from a bank. It then divides up the master and sells the pieces to its customers (investors). Each investor obtains an ownership interest in the master CD. 

While brokered CDs often have long maturity dates (up to 20 years), customers can sell them on the secondary market rather than waiting until they mature. These products are riskier and more complex than standard CDs, so they typically pay a higher return but also carry the risk of loss. Before you buy a brokered CD, make sure it’s insured by the FDIC (not all of them are). 

Divided Approach

A third option is to divide your money into multiple CDs with different banks. This approach can help ensure you don’t exceed the $250,000 per-bank FDIC limit. Also, dividing up your money can help you maximize your investment. For instance, you could deposit some of your money in a standard CD and the rest in a brokered CD. 

Alternatively, you could create a CD ladder, an investing technique in which you combine shorter-term CDs with longer-term ones. Say you have $500,000 to invest. You could purchase five CDs at five different banks, one maturing in 12 months and the other four at 24, 36, 48, and 60 months. Laddering allows you to benefit from the liquidity afforded by short-term CDs and the higher interest rates provided by longer-term CDs.

Can You Add Money to a CD?

Most traditional CDs do not allow you to add or withdraw money from your CD. It’s held at a fixed rate, amount, and length of time until the term expires. These CDs often offer many different term types and higher interest rates than others, including add-on CDs.

Add-on CDs or “add-on certificates” allow you to add money to the CD's principal. They may be in more limited term types, such as 12-month or 24-month, although some offer many different term lengths. Add-on CDs can be opened with as little as $25 at some financial institutions.

How Much Should You Put in a CD Account?

How much money you should invest in a CD depends on your tolerance for risk, your need for cash, and your financial goals. CDs are considered one of the safest options for saving and are a good choice for if you’re risk-averse.

Before you decide on a CD, consider how much cash you can comfortably do without. You should also consider what you’re saving the money for. If you have a short-term goal, like buying a new car or taking an overseas trip, you should invest enough funds to satisfy your objective. You should also pick a CD that matures before you’ll need the money. You don’t want to tie up money in a five-year CD if you plan to spend it in a year.

However, locking all of your savings into a CD rarely makes sense for most people. Instead, think about CDs as part of an overall strategy that includes other asset types. Saving money with CDs might make sense if you have a well-funded liquid emergency account, CD rates are equal to or higher than inflation, and you can risk losing the money.

Growing your money more assertively for a distant goal like retirement will require investments in bonds, stocks, real estate, and other assets that don’t guarantee a return but tend to offer higher returns over time.

Frequently Asked Questions (FAQs)

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