The basic steps to purchase a CD through Charles Schwab
To buy a CD on Charles Schwab, you log into your account, navigate to the Bonds & CDs section, search for CDs by term and rate, select the one you want, and complete the purchase in the same way you would buy a stock or mutual fund. The whole process takes about five minutes once you have decided which CD fits your situation.
You do not need a separate process or approval. If you already have a Schwab brokerage account with cash available, you can buy a CD when ready. Schwab offers both its own CDs (issued by Charles Schwab Bank) and CDs from other banks, so you can compare rates and terms side by side before you commit.
The CD becomes part of your brokerage account and appears on your account statement alongside your other holdings. When the CD matures, the principal and interest are deposited back into your account as cash, and you can then reinvest, withdraw, or hold the money.
Key Takeaways
- You buy CDs through the Bonds & CDs section of your Schwab account by searching for a term length and rate, then placing an order just like you would for a stock.
- Schwab offers CDs from multiple banks so you can compare rates and terms without leaving your account.
- Your CD is held in your brokerage account and is FDIC-insured up to $250,000 per bank per account type, though Schwab's sweep program may provide additional coverage.
- If you sell a CD before maturity, you may receive less than you paid because CD prices move with interest rates, similar to bond prices.
- When your CD matures, the money returns to your account as cash and you decide whether to reinvest, withdraw, or leave it sitting.
Finding and comparing CDs in your Schwab account
Log into your Schwab account and click on the Investing tab, then select Bonds & CDs from the menu. You will see a search tool where you can filter by term length (3 months, 6 months, 1 year, 2 years, 5 years, and so on) and by issuer if you want to see only Schwab's own CDs or only CDs from other banks.
The search results show the current rate, the maturity date, the FDIC insurance status, and the minimum purchase amount (usually $1,000 or $10,000 depending on the CD). Rates change throughout the day as market conditions shift, so the rate you see is the rate available at that moment. Once you click to buy, Schwab will confirm the exact rate before you finalize the order.
You can sort the results by rate (highest first), term length, or issuer to find what works for your timeline and goals. Unlike shopping for CDs at a bank's website, you see multiple banks' offerings in one place, which makes it easier to spot which term is paying the most at that moment.
How to place a CD order and what happens next
Click on the CD you want to buy. Schwab will show you the details again: the rate, the maturity date, the FDIC insurance limit, and the minimum purchase amount. Enter the dollar amount you want to invest (it must meet the minimum and cannot exceed your available cash balance). Review the order summary and click Confirm.
Schwab will process the order when ready if you place it during market hours. The CD will appear in your account as a holding, and you will receive a confirmation email with the purchase details, the rate locked in, and the maturity date. Your cash balance decreases by the amount you invested.
If you place an order after market hours or on a weekend, it will be processed the next business day. The rate shown at the time you placed the order is the rate you will receive, not the rate at the time of processing, so you are protected against rate changes overnight.
FDIC insurance and what it covers
CDs purchased through Schwab are FDIC-insured up to $250,000 per depositor per bank per account type. This means if you buy a CD from Charles Schwab Bank for $50,000 and a CD from another bank (say, Ally Bank) for $50,000 through Schwab, each is insured separately up to $250,000. If you buy two CDs from the same bank in the same account type, the total of both is insured up to $250,000 combined.
Schwab also offers a sweep program that can extend FDIC coverage beyond $250,000 by spreading your cash and CD purchases across multiple FDIC-insured banks. If you hold more than $250,000 in CDs or cash, ask Schwab about this program to understand how your money is protected.
The FDIC insurance does not cover losses if you sell the CD before maturity and interest rates have risen (which would lower the CD's value). It only protects your principal and accrued interest if the bank fails.
What happens if you need to sell before the CD matures
You can sell a CD on the secondary market before maturity through Schwab, but the price you receive depends on how interest rates have moved since you bought it. If rates have risen, the CD's value has fallen, and you will receive less than you paid. If rates have fallen, the CD's value has risen, and you may receive more than you paid.
To sell, go to your holdings, find the CD, and click Sell. Schwab will show you the current bid price (what buyers are offering) and ask you to confirm. The sale settles in one to two business days, and the proceeds are deposited into your account as cash.
Some CDs have early withdrawal penalties if you hold them to maturity but want to access the money before the maturity date. Schwab's CDs typically do not have penalties, but CDs from other banks might. Check the CD details before you buy if early access is important to you.
Reinvesting or withdrawing when your CD matures
As your CD's maturity date approaches, Schwab will send you a notice asking what you want to do: reinvest the principal and interest into a new CD, let the money sit in your account as cash, or withdraw it. You usually have a window of a few days to make this choice.
If you do nothing, Schwab will hold the money as cash in your account. It will not automatically roll into a new CD at the same rate. This gives you time to decide whether to reinvest, shop for a better rate, or use the money for something else.
To reinvest, go back to the Bonds & CDs section, search for a new CD with the term and rate you want, and place an order just as you did the first time. To withdraw, transfer the cash from your Schwab account to your linked bank account through the Transfer Funds section.
Tax reporting for CDs held at Schwab
The interest you earn on a CD is taxable income in the year you earn it, even if you do not withdraw the money. Schwab will send you a Form 1099-INT in January showing the interest paid during the previous year. You report this on your tax return as interest income.
If you sell a CD before maturity and receive more than you paid, the gain is taxable. If you receive less than you paid, you may be able to claim a loss. Schwab will report the sale details on a Form 1099-B, and you will use this to calculate your gain or loss on your tax return.
Keep records of your purchase price, the sale price (if you sell early), and the maturity date. This information is on your Schwab statements and confirmation emails, so you have a clear record for tax time.
Frequently Asked Questions
Can I buy a CD with money from a margin loan or borrowed funds?
No. You can only buy a CD with cash that is actually in your account. If you use margin (borrowed money) to buy stocks or other investments, that borrowed money cannot be used to purchase a CD. The cash must be yours, not borrowed from Schwab.
What is the minimum amount I need to invest in a Schwab CD?
Most Schwab CDs have a $1,000 minimum, but some have a $10,000 minimum. CDs from other banks available through Schwab may have different minimums. The minimum is shown in the CD details before you place your order, so you will know before you commit.
If I buy a CD at Schwab, can I move it to another brokerage later?
CDs held in a brokerage account are not easily transferred to another brokerage. You would need to sell the CD (which may result in a gain or loss if rates have changed) and then use the proceeds to buy a CD elsewhere. It is simpler to leave the CD where it is until maturity.
Do I pay a commission or fee to buy a CD through Schwab?
Schwab does not charge a commission to buy or sell CDs. There are no trading fees. However, if you sell a CD before maturity and the price has fallen due to rising interest rates, you will receive less than you paid — that is a market loss, not a fee.
What happens to my CD if Schwab goes out of business?
Your CD is FDIC-insured, so your principal and accrued interest are protected up to $250,000 per bank per account type, regardless of what happens to Schwab. The FDIC may provide is backed by the U.S. government, not by Schwab's financial health.