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The average rate for a 1-year CD in the US is 1.59% APY (Annual Percentage Yield). However, some of the best online banks pay up to 5.42% APY on a 1-year CD.
A 1-year term may be a good choice if you'd like to maintain a solid interest rate for a relatively short time. If you choose a 1-year CD, you'll also have the chance to earn a higher interest rate if rates are up in a year. If you're also interested in other CD term lengths, check out our overall best CD rates guide.
Best 1-year CD Rates
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These are our picks for the best 1-year CD rates. Our top picks for CDs are protected by FDIC or NCUA insurance. Although Silicon Valley Bank, Signature Bank, and First Republic Bank have recently been shut down, keep in mind money is safe at a federally insured financial institution. When a financial institution is federally insured, up to $250,000 per depositor is secure in a bank account.
Compare 1-year CDs
Expert Advice on Choosing the Best CD
To learn more about what makes a good CD and how to choose the best fit, four experts weighed in:
Insider
How can you be sure you're picking the right bank?
Tania Brown, certified financial planner at SaverLife, says the most important thing is FDIC insurance, which protects your money if the bank were to collapse. For credit unions, the equivalent is NCUA insurance. Next, she says, consider the experience you want to have with your bank: Do you want to walk in and talk to a person? Then you need a bank with a local branch. Are you fine never speaking to someone in person? Then an online bank will work for you. Do you write checks (or not)? Then you need an account that comes with checks.
Sophia Acevedo, a certified educator in personal finance and banking reporter for Personal Finance Insider, adds that it's a good idea to include costs in your list of priorities. For instance, is there a monthly fee for the account you want? If so, what are the requirements to waive it — and can you meet them? If it's important that you earn interest, you'll want to choose a bank and an account that pays a higher interest rate than the average bank account.
How do you choose between all the available CD terms?
Roger Ma, certified financial planner with lifelaidout® and author of "Work Your Money, Not Your Life", says you should start by deciding when you need the money, then looking at available rates for CDs with similar timing.
Knowing how you'll use the money you plan to put in a CD is central to the one you choose, says Mykail James, MBA, certified financial education instructor at BoujieBudgets.com. Perhaps it's a house fund — in that case, if you know that you want to buy a house in two years, you'll need to make sure your CD term ends by then.
When do you use a CD instead of a high-yield savings account or money market account?
Brown says you should know two things to help make this decision: how much money you'll be putting in, and how much you plan to interact with that money. If you're going to need to make transactions before the term of a CD ends, you'll have to choose a high-yield savings or money market account.
Acevedo adds that both the high-yield savings account and money market account can be good options for an emergency fund or short-term savings goals. The savings accounts tend to offer strong interest rates, while money market accounts typically offer more access to your money, like paper checks or debit cards.
Our Methodology
Personal Finance Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product or account — a high APY, for example — we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to.
First, we researched to find over 20 banks and credit unions that offered 1-year CDs. Then, we reviewed each institution using our CD rates methodology to find the most-well rounded banking options. For each account, we compared the minimum opening deposits, early withdrawal penalties, and interest rates. We also considered the overall banking experience at each bank by assessing customer support availability, mobile app ratings, and ethics.
1-year CD Frequently Asked Questions
What is a 1-year CD?
A 1-year CD is a type of savings account. You'll put money into an account for 12 months and earn a fixed rate. You have the option to renew your CD at the end of the year, or close the account and take out your money.
What is the best rate for a 1-year CD?
The best rate for a 1-year CD is 5.42% APY. CFG Bank has a 1-year CD paying this rate.
Which is better, a 1-year CD or a high-yield savings account?
CD could be better than a high-yield savings account if you do not need immediate access to your money or expect interest rates to drop. If rates are rising or you'll need regular access to your money, a savings account might be a better fit.
Which is better, a 1-year CD or a money market account?
You may prefer a money market account over a CD if you want quick access to your money, because it often includes a card or paper checks. Money market account rates also fluctuate, so you may prefer a money market account if rates are rising, but a CD if rates are dropping. You might like a CD if you can keep your money in an account for a year or expect interest rates to go down.
Which is better, a 1-year CD or another investment account?
If you need to access your money in a year and want a guaranteed rate of return, a 1-year CD is a better choice than a different type of investment account. If you're comfortable parting with your money for longer and want to take more risk with your money, you may want to invest in the stock market. Because the stock market is risky, experts generally don't advise investing money you'll need in the next five years.
Why it stands out: CFG Bank has a high interest rate on its 1-year CD, and you'll only need upfront to open one.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 90 days of interest
What to look out for: Limited term options. CFG Bank doesn't have many CD terms to choose from — there are only 12-month, 13-month, 18-month, 36-month, or 60-month CDs.
Why it stands out: BrioDirect could be a good choice if you're specifically searching for CDs. It's offering a promotional 1-year CD with an interest rate that's significantly higher than the average CD.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 90 days of interest
What to look out for: BrioDirect currently isn't offering savings, checking, or money market accounts. You'll have to look elsewhere for these types of accounts.
Why it stands out: Popular Direct pays a competitive rate, and it compounds interest daily.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 270 days of simple interest
What to look out for: You'll need at least $10,000 to open a Popular Direct CD. The early withdrawal penalty is also pretty steep.
Why it stands out: CIBC Bank USA, the US division of the Toronto-based bank Canadian Imperial Bank of Commerce, has competitive CD rates on 1-year, 18-month, and 2-year terms.
APY for a 1-year CD: APY
1-year CD early withdrawal penalty: 30 days of interest
What to look out for: CIBC USA also has a , a few checking account options, and a money market account. The savings account can also be opened from anywhere in the US, but the checking and money market accounts are only available in select counties in Illinois, Michigan, Missouri, or Wisconsin.
Why it stands out: Limelight Bank, an online division of Community Capital Bank, pays a competitive interest rate on a 1-year CD.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 90 days of interest
What to look out for: Limelight Bank only offers CDs. If you plan on opening a savings or checking account at the same bank, you'll have to choose another financial institution.
Keep in mind that Limelight Bank uses the same mobile app as CCBank.
Why it stands out: Bread Savings might be worthwhile if you're searching for a 1-year CD. Interest is compounded daily, which could make a difference depending on how much you deposit into a CD.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 180 days of interest
What to look out for: Generally, financial institutions require only $1,000 to open a CD. To open a CD at Bread Savings, you'll need at least .
The early withdrawal penalty for a 1-year CD is also a bit steep, compared to other financial institutions.
Why it stands out: First Internet Bank of Indiana pays high interest rates on several short-term CDs. First Internet Bank of Indiana also has a savings account, a money market account, and two types of checking accounts.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 180 days of interest
What to look out for: First Internet Bank of Indiana compounds your interest monthly, not daily. Depending on how much money is in your CD, this may or may not make a significant difference.
First Internet Bank of Indiana Review
Why it stands out: Forbright Bank is an eco-friendly financial institution in Maryland that has nationwide online CDs. The 1-year CD offers a high interest rate. You also might like Forbright if you value banking with a financial institution that aligns with your values. Forbright Bank has received a Fossil Free Certification, which means that it will not lend to fossil fuel companies or projects.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 3 months of interest
What to look out for: If you'd like to open a checking, savings, or money market account, you'll have to open an account at a branch in Maryland. Forbright Bank also has limited online CD terms. You may find more variety at other online banks.
Why it stands out: Crescent Bank has high interest rates on a variety of online CDs. Its 1-year term offers the most competitive interest rate out of all its terms.
APY for 1-year CD: APY
1-year CD early withdrawal penalty: 90 days of interest
What to look out for: To open the Crescent Bank CD, you'll need to deposit at least $1,000 in new money. New money means funds that haven't already been deposited into a Crescent Bank account.
Crescent Bank CDs will automatically renew at the end of each term unless you call customer service to cash out your CD.
Other 1-year CDs We Considered
We looked at the following 1-year CDs as well. These CDs ultimately weren't chosen among our top picks because they may have lower rates than our winners, higher minimum opening deposits, or more substantial early withdrawal penalties. You might find some of these options appealing though, depending on your preferences.
- : Although Rising Bank pays a good rate, it only compounds interest every three months. Depending on your balance, this may or may not make a significant difference in how much you accrue.
- : Quontic Bank has a good rate, just not quite as high as what you'll find on our list.
- : AFCU pays a high rate on its 1-year term, but the rates at our top picks are slightly higher.
- : Barclays CDs can be opened with , but our top picks offer higher interest rates.
- : Vio Bank's 1-year term pays a lower interest rate than our top picks
- : Air Force Federal Credit Union pays high CD rates for a 1-year term but you'll need a minimum of $100,000 to qualify for the highest interest rate.
- : PenFed pays a good interest rate on a 1-year CD, but our top picks have even higher rates right now.
- : Alliant offers competitive interest rates for short-term CDs. However, our top picks have even higher interest rates with lower minimum opening deposits.
- : Bask Bank pays a solid rate on a 1-year CD, but our top picks have even higher rates right now.
- : American Express lets you open a CD with , but our top picks offer more competitive interest rates right now.
- : Marcus has high-yield CDs with solid interest rates, but our top picks have more competitive rates for a 1-year CD.
- : First National Bank of America has a variety of CD terms and pays good rates. However, the rates on its CDs don't compete with any of the banks on our list.
- : Capital One 360 might be worth considering if you'd like to open a CD with a low minimum opening deposit. But, its CD rates aren't as competitive as our top picks.
- : Citi Fixed Rate CDs have a low minimum opening deposit. Still, our top picks pay higher interest rates right now.
- : You'll need a minimum opening deposit of to open a CD at Sallie Mae. Our top picks have lower minimum opening deposits.
- : Bank5 Connect has a strong interest rate on a 6-month CDs, but its other CD terms aren't as strong.
- : Nationwide's 1-year CDs and 18-month CDs are its most appealing options, but other online banks offer even higher rates right now.
- : Ally CDs might be a good choice if you'd like to get a CD with a minimum opening deposit or low early withdrawal penalties. But its CD rates are currently lower than any of the banks on our list.
- : The initial opening deposit for a Discover CD is . Our top picks have lower minimum opening deposits.
- : You'll need at least to open an account, which is a bit steep compared to other online banks.
- : Amerant has solid interest rates, but our top picks offer more competitive rates right now.
- : Connexus requires a minimum opening deposit of . Our top picks have much lower minimum opening deposits.
- : NBKC offers competitive interest rates on long-term CDs, but its short-term CDs aren't as strong.
- : Live Oak Bank offers a competitive interest rate, but you'll need at least to open an account.
Bank Trustworthiness and BBB Ratings
We've compared each banks Better Business Bureau score. The BBB grades businesses based on factors like responses to customer complaints, honesty in advertising, and transparency about business practices. Here is each company's score:
| Institution | BBB grade |
| CFG Bank | None |
| BrioDirect | B- (rating from Webster Bank, the partner bank of BrioDirect) |
| Popular Bank | A+ (Rating for its parent bank, Popular Bank) |
| CIBC Bank USA | A+ (F rating from parent company) |
| Limelight Bank | A+ (rating from parent company, CCBank) |
| Bread Savings | NR (rating from Comenity Capital Bank, the partner bank of Bread Savings) |
| First Internet Bank of Indiana | A+ |
| Forbright Bank | A+ |
| Crescent Bank | A+ |
CFG Bank currently doesn't have a rating because its profile is being updated on the BBB website. The BBB gave BrioDirect's parent company, Webster Bank, a B- rating because it received numerous customer complaints filed against the bank and hasn't resolved one of the complaints.
The BBB gave CIBC Bank USA an A+ rating. However, its parent company CIBC has an F rating because the BBB has received numerous complaints, and the bank hasn't responded to or resolved some complaints.
Bread Savings' partner bank has an NR ("No Rating") because the BBB is evaluating a pattern of complaints before giving a rating.
A BBB rating isn't necessarily the be-all and end-all. If you'd like to see if a company is a good fit, talk to current customers or read online customer reviews.
Bread Savings and CIBC Bank have been involved in a recent public controversies.
According to a note on the BBB website about Comenity Capital Bank (Bread Savings' partner bank), there has been a pattern of complaints and reviews received by the BBB between October 15, 2022, and November 14, 2022. The complaints claim that customers have experienced billing inaccuracies, customer service deficiencies, and inaccurate reporting to credit bureaus. Comenity agreed to meet with the BBB on March 2, 2023.
As of April 23, 2023, Comenity stated it is taking the following steps: 1) investigating complaints, disputes, and fraud concerns; 2) adding staff and more training for customer service agents; and 3) reporting accurate and timely information to credit bureaus. The BBB will provide updates as needed.
In 2021, CIBC agreed to pay $125 million in a settlement when accused of misrepresenting financial information regarding CIBC investments and US residential mortgage-backed securities.
from All Content from Business Insider https://www.businessinsider.com/personal-finance/best-1-year-cd-rates
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