Can You Add Money to a CD?

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Understanding Certificates of Deposit (CDs)

Certificates of Deposit (CDs) are special types of bank accounts where you deposit money for a fixed period. In return, you get a guaranteed interest rate. CDs are known for their fixed terms and rates, providing a predictable income.

Adding Money to CDs: The General Rule

Typically, you cannot add money to a traditional CD after your initial investment. When you open a CD, you deposit a lump sum that stays locked until the CD matures. This is one of the fundamental features of CDs.

Examples of CD Contributions

  • If you open a $1,000 CD with a term of 5 years, you cannot add more money to this CD during its term.
  • To invest additional funds, you would need to open a new CD with a new deposit.

Exceptions: Add-On CDs

Some banks offer “Add-On CDs.” These allow you to add money to your CD during its term. However, they are less common and might come with specific rules.

  • Example: A bank may offer a 2-year Add-On CD where you can add money at any time during the first year.

Traditional CD vs Add-On CD

FeatureTraditional CDAdd-On CD
Additional DepositsNot allowedAllowed under certain conditions
Interest RatesGenerally higherMight be lower than traditional CDs
FlexibilityLowHigher compared to traditional CDs
AvailabilityCommonLess common

Conclusion

In most cases, you cannot add money to a CD after the initial deposit, except with special Add-On CDs. Understanding this limitation is crucial when planning your savings or investment strategy. CDs are best for one-time, lump-sum investments that you can set aside for a fixed period. For more flexible options or to learn about Add-On CDs, contact us today for a free quote.

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Frequently Asked Questions

Can you add money to a CD?

Typically, you cannot add money to a traditional CD after your initial investment. When you open a CD, you deposit a lump sum that stays locked until the CD matures. This is one of the fundamental features of CDs.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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