Best Type of Bank for a CD Account: Traditional, Credit Union, or Online?

Last Updated: September 2026
Best Type of Bank for a CD Account: Traditional, Credit Union, or Online?

Quick answer: Online banks tend to offer the highest CD interest rates because they don’t have the cost of running branches. Credit unions are often a close second, with lower fees and a more personal touch. Traditional banks offer the most convenience and the widest range of products, usually in exchange for a lower rate. If you want a strong rate and the comfort of a real bank behind it, check out current CD rates and terms at Customers Bank.

If you’ve ever opened a savings account, a CD account works the same basic way, with one twist: you agree to leave your money in for a set period of time, and in exchange, the bank pays you a higher, locked-in interest rate. The tricky part isn’t understanding what a CD is. It’s figuring out which type of bank should hold it.

Here’s what you need to know about your three main options, plus what we offer at Customers Bank if a strong rate and FDIC insurance are what you’re after.

What Is a CD Account, Exactly?

A certificate of deposit, or CD, is a savings account that locks in a fixed interest rate for a set amount of time, often anywhere from a few months to several years. In return for agreeing not to touch your money during that period, you usually earn a better rate than you’d get with a regular savings account.

Traditional Banks

This is what most people picture when they think “bank.” Traditional banks offer the full lineup: checking, savings, loans, credit cards, and yes, CDs.

Advantages:

  • Your money is FDIC-insured, so it’s protected.
  • Branches and ATMs are usually easy to find.
  • Most have solid online and mobile banking too.
  • You can handle everything, checking, savings, loans, in one place.

Considerations:

  • CD rates tend to run lower than what you’d find at a credit union or online bank.
  • You may run into fees for account maintenance, overdrafts, or other services.

Credit Unions

Credit unions are member-owned and not-for-profit, which changes the math a bit. Because they’re not chasing profits the way banks are, they can often pass along better rates and lower fees.

Advantages:

  • CD rates are often higher than what traditional banks offer.
  • Fees tend to be lower across the board.
  • Your deposits are insured by the NCUA, so your money is just as protected as it would be at a bank.
  • Service can feel more personal since credit unions are built around their members.

Considerations:

  • You may need to meet specific requirements to join, like living in a certain area or working for a particular employer.
  • Fewer branches and ATMs can make access a little less convenient.

Online Banks

Online banks skip the branches entirely, which means lower overhead, and that savings often gets passed on to you in the form of better rates.

Advantages:

  • CD rates are frequently the highest of the three options.
  • Fees tend to be minimal.
  • You can open and manage everything from your phone or computer.
  • Your money is still FDIC-insured, just like at a traditional bank.

Considerations:

  • No physical branch means no face-to-face help. You’re relying on phone, chat, or email if something comes up.

Where Customers Bank Fits In

We’re a traditional bank, but we built our CD offering to compete with what you’d find at an online bank. You get a strong rate and FDIC insurance, but you can also pick up the phone and talk to a real person if you have questions.

We offer a range of CD terms, so whether you want to park your money for a few months or commit for the long haul, there’s likely an option that fits. You can see today’s rates and our full lineup of CD terms here.

What you can expect:

  • Competitive rates across multiple terms
  • Easy online account management
  • FDIC insurance, so your money is protected

If opening a CD sounds like the right move, one of our bankers is happy to walk through whether it fits your savings goals. Connect with us today.

Frequently Asked Questions on CDs

Is now a good time to open a CD?

It depends on your goals and how the rate environment looks at the time. CDs work best when you have money you won’t need for a while and you want to lock in a rate before it potentially drops. A banker can help you figure out if the timing makes sense for you.

What happens if I need my money before the CD term ends?

Most CDs charge an early withdrawal penalty if you take money out before the term is up. That’s why it’s worth being realistic about your timeline before you open one.

How is a CD different from a regular savings account?

A savings account lets you add or withdraw money whenever you want, but the rate can change at any time. A CD locks in your rate for a set period, but you agree not to touch the money until the term ends.

Can I lose money in a CD?

No, as long as your CD is at an FDIC-insured bank or NCUA-insured credit union and you stay within insurance limits. The only “cost” is the early withdrawal penalty if you need the money sooner than planned.

What happens when my CD matures?

When your CD reaches the end of its term, it will automatically renew for the same term at whatever the current rate is for that period. However, you have a ten-day grace period after the maturity date to make a decision without any penalty.

How do I choose the right CD term?

If you’re unsure, it comes down to one question: when might you need the money? If you’re setting aside funds you won’t need for a few years, a longer term CD gives you a locked in rate. However, if you think there’s a chance you’d need access sooner, a shorter term keeps things more flexible. A short term CD might run from 3 to 9 months.