Banking » Compare Banks » Best 1-Year CD Rates For February 2024: Comparison
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Best 1-Year CD Rates For May 2024: Comparison

The top CDs for 1-year offer about 4%-5% APY. Here's a rates comparison, how much you can earn, and what is the early withdrawal penalty
Author: Lorraine Smithills
Lorraine Smithills

Writer, Contributor

Experience

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
Interest Rates Last Update: April 15, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Lorraine Smithills
Lorraine Smithills

Writer, Contributor

Experience

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
Interest Rates Last Update: April 15, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

We earn a commission from our partner links on this page. It doesn't affect the integrity of our unbiased, independent editorial staff. Transparency is a core value for us, read our advertiser disclosure and how we make money.

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
4.80%
$0
4.90%
$0
3.50% (13 months)
$1,000
4.50% – 4.76% (11 months)
$2,500
4.00%
$0
5.25%
$1,500
4.95%
$2,500
4.20%
$1,000
5.01% – 5.06%
$5,000
5.40%
$1,000
5.00%
$1,000
5.30%
$1,000
4.95%
$2,500
5.00%
$1,000
5.00%
$2,500
5.15%
$2,500
4.50%
$0
4.90%
$500
4.95%
$25,000
2.00% – 3.00%
$500
4.30% (13 months)
$1,000
2.00%
$1,000
5.20%
$1,000
4.55% (11 months)
$250
4.00%
$50
5.15%
$1,000
4.50%
$1,000
5.40%
$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
5.25%
$5,107
Synchrony Bank
4.80%
$4,796
Capital One Bank
4.90%
$4,178
Discover Bank
4.95%
$4,538
PenFed Credit Union
4.20%
$4,641
Connexus Credit Union
5.01% – 5.06%
$4,652 – $4,910
Charles Schwab
5.00%
$5,210
Vanguard
5.40%
$5,210
Fidelity
5.30%
$5,107
Sallie Mae
4.95%
$4,951
EverBank
5.00%
$4,435
Live Oak Bank
5.00%
$5,055
LendingClub
5.15%
$4,024
Ally Bank
4.50%
$4,538
Marcus
4.90%
$4,796
Merrick Bank
4.95%
$5,107
Citibank
2.00% – 3.00%
$4,075

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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
5.25%
5.15%
Synchrony Bank
4.80%
4.75%
Capital One Bank
4.90%
4.35%
Discover Bank
4.95%
4.25%
PenFed Credit Union
4.20%
3.00%
Connexus Credit Union
5.01% – 5.06%
N/A
Sallie Mae
4.95%
4.50%
TIAA Bank
5.00%
5.15%
Live Oak Bank
5.00%
4.40%
LendingClub
5.15%
5.00%
Ally Bank
4.50%
4.25%
Marcus
4.90%
4.40%
Merrick Bank
4.95%
3.51% – 5.01%
Citibank
2.00% – 3.00%
4.45%

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:

  1. 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.

  2. 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.

  3. 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.

  4. 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.

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Picture of Lorraine Smithills

Lorraine Smithills

Lorraine is a freelance finance writer with years of experience in the banking sector and after a successful career in one of the largest retail and commercial financial services providers. She has a passion for helping people with less financial confidence to get control of their money through budgeting, saving, and responsible credit practices.
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