Can I Open as Many CDs as I Want?

If you have money socked away in the bank for emergencies, then your best bet is generally to keep it in a regular savings account. But if you have money beyond that and you don't want to invest it in a brokerage account and risk losing it in a down market, then you may want to open a certificate of deposit, or CD, instead.

The upside of going this route is that CD rates are commonly more generous than savings account rates. But there's a danger of tying money up in a certificate of deposit. If you end up needing to cash out your CD before it comes due, you could face a costly penalty, which will vary by bank. At Wells Fargo, for example, you'll be penalized three months of interest for cashing out a 12-month CD before it comes due.

It's for this reason that you'll often be told to ladder your CDs rather than put all of your money into a single CD. With a CD ladder, you have CDs maturing at different times so that your money is freed up at different intervals, giving you more flexibility.

But how many CDs should you open as part of this strategy? And is there a limit to how many you can open?

You have choices when it comes to CDs

Generally speaking, you can open as many CDs as you want. Will your bank say no if you already have 15 CDs and attempt to open CD No. 16? Maybe, since that could be considered an excessive amount. But in that case, you could always go to another bank and open a CD there.

That said, just because you can generally open as many CDs as you want doesn't mean you should have several dozen of them. It's a good idea to have your money available to you at varying intervals, so a good idea may be to open four or five CDs that come due at various points during the year. That way, you have access to some of your money every two to three months.

But beyond that point, having multiple CDs could get messy. You might have a hard time tracking your CDs and keeping tabs on when they mature. And you might end up causing yourself needless hassle. So while there's no specific answer as to what number of CDs is the right number, you may want to stick to half a dozen or less so you're able to manage your money with relative ease.

Should you open your CDs at different banks?

You might open three CDs with varying maturity dates at one bank, only to then see a better rate at a different bank. In that case, you may want to open your fourth CD at the bank that's paying more.

But if you find a bank with top CD rates, it could work to your benefit to have all of your money at the same institution. That could make it easier to track your funds and, as needed, transfer funds back and forth between accounts.

That said, if you're planning to deposit more than $250,000 into various CDs, then you should open CDs at multiple banks. FDIC insurance protects you from losses for up to $250,000 in deposits per bank. But if you have more money than that, you'll want to spread it around to make sure your cash is protected.