Logistics of opening CD account at a Financial Intuitions

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seekingcashflow
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Joined: Tue May 26, 2020 2:28 am

Logistics of opening CD account at a Financial Intuitions

Post by seekingcashflow » Sat Aug 01, 2020 1:14 pm

Spent the last few days researching CDs. I have some questions about the actual process of opening a CD.
I thought the process would be simply logging into online banking and transferring money from my checking account into the CD.

Instead, most FI (Financial Intuitions) require you to create a whole other account, even if you have a pre-existing relationship with the FI.

Let's say I buy a CD 1 today. I create a account for CD 1 . In the future I want to buy another CD. Call this CD 2. Will I have to create another account for that CD 2 or can I use CD 1 account?

This screen shot from, Bank of America, suggest that I would have to create an account for CD 2 since the language specifies that "Your're applying for" something specific. As opposed to saying "You can purchase all your CDs in this account.
Image

clip651
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Re: Logistics of opening CD account at a Financial Intuitions

Post by clip651 » Sat Aug 01, 2020 1:22 pm

Every time I've had a CD anywhere, it has its own account number, regardless how many other accounts, like checking, I might have at that bank.

I have several CDs at Ally, for example. A few of those were opened on the same day. Each has it's own account number. Each also has its own maturity day, terms (e.g. no penalty, raise your rate, regular CD, etc), and beneficiaries. Ditto for CDs I have held elsewhere.

cj

MrJedi
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Re: Logistics of opening CD account at a Financial Intuitions

Post by MrJedi » Sat Aug 01, 2020 1:30 pm

Haven't used BOA, but in my experience it just looks like another account amongst any other accounts you have. Like maybe you have a checking, a savings, a few CDs. Each one of these has its own unique account number. CDs of course just have the restrictions on deposits and withdrawals, otherwise they look like any other bank account.

I've always seen them linked together with any other accounts you have at the institution, if that's what you're asking. Like I login online and see the CDs along with savings accounts, etc.

sycamore
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Re: Logistics of opening CD account at a Financial Intuitions

Post by sycamore » Sat Aug 01, 2020 1:41 pm

My experience is like the previous responses.

I never thought about why but I assume the reason financial institutions have a separate account for each CD is because each CD may have different terms and conditions (rates, penalties, etc.) and the "account" is where they keep track of that.

Contrast with a brokerage account where you have one account and multiple investments (stocks, bonds, ETFs, CDs) within it.

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dodecahedron
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Re: Logistics of opening CD account at a Financial Intuitions

Post by dodecahedron » Sat Aug 01, 2020 2:13 pm

sycamore wrote:
Sat Aug 01, 2020 1:41 pm
My experience is like the previous responses.

I never thought about why but I assume the reason financial institutions have a separate account for each CD is because each CD may have different terms and conditions (rates, penalties, etc.) and the "account" is where they keep track of that.
Yes, also even if the terms and conditions (rates, penalties, etc.) are identical, the *maturity* date will vary. A five year CD opened yesterday has a different maturity date than one opened today.

Even if I open several CDs with identical terms on the exact same day, it may often be in my interest to keep them separate if partial withdrawals are not allowed. If I need to access some but not all of the funds before maturity, the penalty is less if I only break one smaller CD rather than one big one. (Of course, keeping the funds combined may qualify for a higher tier of interest rates.)

There are occasionally very nice but rare deals where you can open a CD account with a small amount and are allowed to add funds to that same account as often as you like during its term. Navy Fed had some deals like that last winter. You could open a 37 month CD at 3% for an initial deposit as little as $50 and lock in the right to add up to a total of $150,000 at any time during the term of the CD. You have to be alert and nimble and jump through some eligibility hoops but if you qualify and it is convenient they are excellent deals to be had if you are in the right place at the right time.

https://www.depositaccounts.com/banks/n ... lationship.

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