Can You Deposit Money in a CD Account?

A Certificate of Deposit (CD) is a type of savings account designed to hold a fixed sum of money for a specific period, known as the term, at a predetermined interest rate. This financial product offers a predictable return and is generally considered low-risk, as deposits are typically insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor per insured bank. While CDs can offer higher interest rates than traditional savings accounts, they come with a trade-off: your funds are usually locked in until the maturity date. This often leads to questions about the flexibility of adding money to a CD once it has been opened.

Initial Funding of a Certificate of Deposit

Opening a traditional Certificate of Deposit typically involves a single, lump-sum deposit. This initial deposit sets the principal amount for the CD’s entire term. Banks require a minimum deposit, which can range from $100 to $25,000 for certain promotional or jumbo CDs. Once this initial sum is placed, the interest rate is locked for the duration of the chosen term.

The process of making this initial deposit is similar to funding other bank accounts. You can transfer funds from an existing checking or savings account, deposit a check, or arrange a wire transfer. This upfront commitment is a defining characteristic of traditional CDs, ensuring the financial institution can invest the funds with a clear understanding of the principal amount. The fixed principal allows for the calculation of a consistent interest yield.

Depositing Money After Opening

For most traditional Certificate of Deposit accounts, depositing additional money after initial funding is not permitted. Once the CD is opened, the principal amount is fixed for the entire term. This fixed structure is fundamental to how traditional CDs operate, as the interest rate is set for that particular principal and term.

Adding funds would complicate this fixed agreement, potentially altering interest calculations and the terms of the original contract. Therefore, once your money is committed to a traditional CD, it remains locked for the agreed-upon period. You cannot contribute further to that specific existing CD account during its term.

Certificate of Deposit Types for Additional Funds

While most traditional CDs do not allow additional deposits after opening, specific types of Certificate of Deposit accounts offer more flexibility. “Add-on CDs” are a prime example, designed to permit further contributions throughout their term. This feature benefits savers who wish to grow their balance gradually or do not have a large lump sum to deposit initially.

With an add-on CD, you make an initial deposit, then continue to add money over time, similar to a savings account. These additional deposits typically earn the same fixed interest rate as the original contribution, ensuring a consistent return. Banks may impose certain restrictions, such as limits on the total amount that can be deposited or specific windows for deposits. While offering greater flexibility, add-on CDs might sometimes feature slightly lower interest rates compared to traditional fixed-rate CDs.

Managing Funds at Certificate of Deposit Maturity

When a Certificate of Deposit reaches its maturity date, the term ends, and the funds become accessible without penalty. Financial institutions typically notify CD holders in advance, providing details on available options. The primary choices at maturity include withdrawing the funds or reinvesting them into a new CD.

Reinvestment, often referred to as “rolling over” the CD, involves placing the principal and any accrued interest into a new CD. This is essentially a new deposit into a new CD account, distinct from adding money to an existing one. Most banks offer an automatic renewal feature. If no instructions are provided during a grace period (typically 7 to 10 days after maturity), the CD will automatically roll over into a new CD with a similar term at the current interest rate. During this grace period, you can choose a different term for the new CD, add additional funds, or withdraw the money entirely.