Table Of Content
What Are The Current CD Rates for One Year?
There is no easy answer to this question as the rates are determined by the individual financial institution. At the time of writing this article, the national average rate for one year CDs is 1.28%, but there are some banks that are offering far lower rates while others offer far more.
For example, typically traditional banks offer lower rates, so in this instance a one year CD may have a rate of 2-3% APY or less. On the other hand, if you’re looking at one year CDs from an online bank or credit union, you may be able to get 3-4% APY and even more than that.
Financial Institution | 12 Months CD APY | Minimum Deposit |
|---|---|---|
4.70% | $0 | |
4.50% | $0 | |
3.50% (13 months) | $1,000 | |
4.50% – 4.76% (11 months) | $2,500 | |
4.10% | $0 | |
4.90% | $1,500 | |
4.70% | $2,500 | |
4.00% | $1,000 | |
4.91% – 4.96% | $5,000 | |
4.60% | $1,000 | |
4.50% – 4.15% | $1,000 | |
4.35% | $1,000 | |
4.80% | $2,500 | |
5.00%
| $1,000
| |
4.70% | $2,500 | |
4.40% | $2,500 | |
4.70% | $0 | |
4.70% | $500 | |
4.35% | $25,000 | |
4.00% | $500 | |
3.93% (13 months) | $1,000 | |
2.00% | $1,000 | |
5.00%
| $1,000 | |
4.55%
(11 months) | $250 | |
4.00%
| $50 | |
5.00%
| $1,000
| |
4.50%
| $1,000 | |
5.60%
| $100,000 |
How Much You Can Earn With 1 Year CD?
A one year CD refers to the CD having a one year term. This means that you are locking in your funds for one year. After this time, the CD matures and you can then withdraw the funds, open a different CD or renew your CD for another one year CD.
Here's your expected earnings (before tax) if you lock your money for 12 months.
Financial Institution | 12 Months CD APY | Interest Earned |
|---|---|---|
Bread Financial
| 4.90% | $5,107
|
Synchrony Bank | 4.70% | $4,796
|
Capital One Bank
| 4.50% | $4,178
|
Discover Bank
| 4.70% | $4,538
|
PenFed Credit Union | 4.00% | $4,641
|
Connexus Credit Union | 4.91% – 4.96% | $4,652 – $4,910
|
Charles Schwab | 4.50% – 4.15% | $5,210
|
Vanguard | 4.60% | $5,210
|
Fidelity | 4.35% | $5,107
|
Sallie Mae | 4.80% | $4,951
|
EverBank
| 5.00%
| $4,435
|
Live Oak Bank | 4.70% | $5,055
|
LendingClub | 4.40% | $4,024
|
Ally Bank
| 4.70% | $4,538
|
Marcus | 4.70% | $4,796
|
Merrick Bank | 4.35% | $5,107
|
Citibank | 4.00% | $4,075
|
Top Offers From Our Partners
What Are the Main Drawbacks of a 1 Year CD?
No banking product is without potential downsides and there are several possible drawbacks to one year CDs.
- Early Withdrawal Penalties: Although one year does not seem like a long time to tie up your money, a lot can happen over the space of 12 months. If you find that you need access to your funds before the CD matures, you’ll incur an early repayment penalty. For this length of CD, you are typically looking at forfeiting three months of simple interest, which could be all of what interest you’ve accumulated.
- Inflation Risk: While CDs can provide with decent rates, it's still lower than inflation pace. In such a case, your money power still decreases.
- Minimum Deposit: Despite the relatively short term, some banks do impose a significant minimum deposit, which may make the product out of reach for you.
Financial Institution | Early Withdrawal Penalty For 12 Months CD APY |
|---|---|
Bread Financial
| 180 days simple interest
|
Synchrony Bank | 90 days of interest
|
Capital One Bank
| 3 months of interest
|
Discover Bank
| 6 months of interest
|
PenFed Credit Union | 365 days / 30% of dividends
|
Connexus Credit Union | 90 days of dividends |
Sallie Mae | 90 days of interest
|
TIAA Bank
| 25% of total interest |
Live Oak Bank | 90 days of interest |
LendingClub | 100% of total interest |
Ally Bank
| 60 days of interest
|
Marcus | 180 days of interest
|
Merrick Bank | 180 days of interest
|
Citibank | 90 days of interest
|
When to Consider a 1 Year CD
There are numerous scenarios where it is seriously worth considering a one year CD, such as:
- Interest Rates are Rising: If interest rates are on an upward trend, you may not want to tie your money up for several years. However, a one year CD will provide you the time to assess your options. When the CD is approaching maturity, you can look around to see if there is a better deal available.
- You Want to CD Ladder: Shorter term CDs such as a 1 year CD are a great product if you want to create a CD ladder. You can purchase a series of one year CDs and arrange them to mature according to your preferred schedule.
- You’ll Need the Funds in One Year: If you have plans on the horizon for next year, a one year CD can be a great place to park the funds until you need them. While there are shorter term CDs available, they often have lower rates, so a one year CD can offer the best of both worlds.
When You May Want to Skip a 1 Year CD
The reverse also applies and there are some situations when a one year CD is not the best option for you.
- The Rates Don’t Compare Favorably to Savings Accounts: We’ll delve into this in more detail below, but in some cases, you may find that there are high yield savings accounts that offer the same or better rates than a one year CD.
- You May Need the Funds: This is obvious, but you’ll need to seriously think about whether you will have a need for the funds before the year is up. Early withdrawal penalties can add up and if you’ve not accumulated sufficient interest, some banks will take the remainder from your initial deposit.
1 Year CD Vs Savings Account: Which Is Better?
In some circumstances a savings account can be a valid alternative to a CD, but you need to understand the differences between these products.
Typically, savings accounts allow you to add money to the account as and when you like, but CDs require an additional deposit and you’ll not be able to add further funds after the short grace period. So, if you are saving for a goal, a savings account would be a better choice.
Another key difference is the withdrawal restrictions. Unless you have a high yield savings account, you’ll be able to access the funds in your savings account as and when you please. High yield savings accounts do have some restrictions, but these are fairly inoffensive, as you are typically limited to a maximum of six withdrawals per month.
If you’re looking at high yield savings accounts, you are also likely to find that the rates compare with one year CDs. Depending on the financial institution, you may get a better rate with a CD or vice versa.
Financial Institution | 12 Months CD APY | Savings Account APY |
|---|---|---|
Bread Financial
| 4.90% | 5.15% |
Synchrony Bank | 4.70% | 4.65% |
Capital One Bank
| 4.50% | 4.25% |
Discover Bank
| 4.70% | 4.25% |
PenFed Credit Union | 4.00% | 3.00% |
Connexus Credit Union | 4.91% – 4.96% | N/A |
Sallie Mae | 4.80% | 4.50% |
TIAA Bank
| 5.00%
| 5.05% |
Live Oak Bank | 4.70% | 4.40% |
LendingClub | 4.40% | 5.00% |
Ally Bank
| 4.70% | 4.20% |
Marcus | 4.70% | 4.40% |
Merrick Bank | 4.35% | 3.41% – 5.15% |
Citibank | 4.00% | 4.30% |
Related Posts
How We Picked The Best 1-Year CD Rates: Methodology
The Smart Investor team thoroughly reviewed banks and credit unions to find the best 1-year CD rates. We focused on four main categories to rate them:
Interest Rates and Terms (50%): We looked at how much interest the CD offered and any conditions or penalties for withdrawing money early. CDs with higher interest rates and more flexible terms got higher ratings.
CD Features (20%): This category considered additional features like the minimum deposit required to open the CD, any special promotions or bonuses offered, and whether the CD automatically renews at maturity. CDs with lower minimum deposits, attractive promotions, and flexible renewal options received higher scores.
Customer Experience (20%): We assessed how easy it is to open a CD, communicate with customer service, and use the bank's website or mobile app. Banks with user-friendly interfaces, responsive customer support, and convenient digital banking tools earned higher ratings.
Bank Reputation (10%): We researched each bank's reputation based on customer reviews, ratings from sources like JD Power, TrustPilot, and the Better Business Bureau (BBB). Banks with positive reputations and satisfied customers received higher ratings.
Our ratings considered various factors within each category to help you find the best 1-year CD that suits your needs and preferences.
