Wells Fargo offers an extensive list of financial products with everything from checking accounts to mortgages to wealth management services. One product you may be interested in if you’re looking for a risk-averse investment is a Wells Fargo CD. Comparatively, the bank’s certificates of deposit have a higher minimum deposit requirement than other banks, but its APY rates are on par with the rest of the traditional brick-and-mortar banking industry. What is interesting is the bank also offers step rate CDs that come with rate increases at three points throughout the life of the CD.
Dating back to 1852, Wells Fargo is one of the oldest banks in the U.S. Headquartered in San Francisco, California, the bank serves millions of customers as the 6th largest bank in total assets and the 10th largest public company in the entire world as of 2019. If you’re looking for a CD provider that can also handle all of your other banking needs under one roof, you may want to consider Wells Fargo.
Wells Fargo at a glance
|Bank||Min. Deposit||1-Year APY||3-Year APY||Penalty|
|Wells Fargo||$2,500||0.01%||0.01%||30 days interest on CDs less than 3 months;
90 days interest on CDs 3 to 12 months;
180 days interest on CDs 12 to 24 months;
365 days interest on CDs more than 24 months
What we like about it
Investors looking for a unique CD product might like the step rate CDs from Wells Fargo. The CDs are two years in length and have guaranteed rate increases at three different points throughout the life of the CD. Additionally, the bank is offering a special five-month CD with an APY rate of 0.01%. Keep in mind you will need to meet a higher than usual minimum deposit requirement of $5,000 to take advantage.
Things to consider
You have some limitations when it comes to Wells Fargo CD options. First, term lengths on standard CDs are only available in three months, six months and one-year increments. You can get a two-year CD through the bank but only as a step-rate CD. You can also get a five-month Wells Fargo CD, but you will need to meet a higher account minimum.
Compared to other banks, the minimum account requirement of $2,500 is rather high. Other traditional banks like Chase and Bank of America only require a $1,000 minimum deposit. When you expand your search to online banks, providers like Capital One offer CDs with a $0 minimum required opening balance. This higher limit may price out some newer or smaller-level investors.
What you need to know
Term lengths are severely limited when it comes to Wells Fargo CDs. Your only options for standard CDs are three months, six months and a year — APYs on these products are 0.01%. On the other hand, step rate CDs are available in two-year terms with an APY of 0.16% as well. If you’re looking for something shorter, your only option is the special five-month CD that has a higher minimum deposit of $5,000 and an APY of 0.01%.
When you compare Wells Fargo CDs to traditional brick-and-mortar banks, the rates are comparable. However, when you include online banks into the mix, the rates at Wells Fargo are much lower.
Wells Fargo CD products are available to all consumers, even if you’re not a customer with the bank, but existing customers who link a Wells Fargo CD to a Portfolio by Wells Fargo account will receive a higher APY rate. Regardless of your relationship with the bank, there are no additional fees for opening or maintaining a CD account.
Early withdrawal penalties
The idea of a CD is that you invest the money and leave it untouched for the term length. The bank counts on this, so when you have to unexpectedly access your funds early, there is a penalty. With Wells Fargo, the penalty is dependent on the length of the CD.
For CDs of less than three months, the maximum penalty is 30 days interest. For Wells Fargo CDs between three months and 12 months, the penalty caps out at 90 days of interest. CDs from one to two years have a maximum of 180 days of interest. The bank’s website lists a maximum penalty of 365 days of interest for CDs over two years, but there are currently no such options through Wells Fargo.
Here’s an example of how this would work. If you invested in a year CD through Wells Fargo but needed to access the money after six months, you would incur a penalty of 90 days of interest. Since you had already accrued 180 days of interest, you would keep 90 days of the interest and Wells Fargo would take the other 90 back as an early withdrawal penalty.
Other CD products
In addition to the standard Wells Fargo CDs, the bank also offers a two-year step-rate CD. With this CD, your interest rate will be increased at the 7, 13 and 19-month marks.
Wells Fargo does not have rate guarantees on any of its CD products. But due to the nature of CD accounts, whatever rate you receive when you open your account will be locked in for the duration of the time. All APY and interest earnings are guaranteed with Wells Fargo CDs as long as you don’t access your funds before the maturity date.
How do I pick the best CD?
To pick out the best CD for you, consider all factors and not just the APY rate. In addition to getting the best CD rate possible, you want to look at FDIC or NCUA insurance, available term lengths, early withdrawal penalties, account minimums and any additional fees that might be applicable. It’s all about finding out how to make your money work the best for you in a secure environment.
The bottom line
Wells Fargo offers certificates of deposit with rates that are lagging behind online banks but are competitive with traditional banks. The bank does offer a unique step-rate CD and a five-month CD option with specialty APYs. If you are already a Wells Fargo customer, you may want to consider linking a Portfolio by Wells Fargo account to your CDs to get a better rate across all products. While you can get better rates at online banks, Wells Fargo might be the right solution for customers that want all of their banking handled in one spot that they can physically walk into.