The Best 1-Year CD Rates

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Is a 1 year CD right for you?

If you’re thinking about investing in a 1 year CD, you’ll want to take a look at the list we’ve put together for you below. As you know, CDs are conservative investments where your money is relatively safe and secured by the Federal Deposit Insurance Corporation (FDIC) for banks or the National Credit Union Administration (NCUA) up to $250,000.

In return for a higher interest rate, you’ll have to give up some flexibility. Many CDs come with early withdrawal penalties if you decide to tap into your savings before the CD’s term is up.

When you invest in 12 month CDs, you’ll want to get the best rate on your investment so you make the most money. Since 2013, the average rate on a one-year CD has risen only slightly, from 0.454% to 0.770%.

But you can absolutely find better deals out there, especially among internet-only banks, which make up half our list of the top 10 deals this month.

How we chose the best 1 year CDs

We used data from DepositAccounts to compare CD rates by annual percentage yield (APY). We excluded institutions with a financial health rating below a B, as well as credit unions with very restrictive membership requirements.

From there, we chose the 10 CDs with the highest APY. If two CDs had the same APY, we broke the tie by choosing the one with the lower minimum deposit. (We consider that a better choice, since it will be available to more people.)

All products discussed on this page are FDIC- or NCUA-insured.

Make sure you can commit to a year

Investing Rule No. 1: Never invest money you’re going to need sooner than the term allows.

If you think there’s even the slightest chance you’re going to need the money you’re about to invest sooner than a year, then don’t invest in this length of CD. The price you pay for early withdrawal is steep, and you could consequently lose more than you make in interest depending on when you make the withdrawal.

Although investments such as stocks have a higher return, they also have a higher risk of loss. If you definitely need the money in one year, a CD is a secure investment that ensures your money will be there when you need it and you can count on it earning a certain amount of interest until you do.

You may find a 12 month CD that offers no-penalty withdrawals, but the rate likely won’t be as high and you might be better off just keeping your funds in a high-yield savings account instead.

One year CD vs high-yield savings accounts

While 1 year CD rates are on the rise, they are hardly high enough to keep up with inflation. In fact, many financial advisers discourage a majority-CD investment approach for that reason.

There’s also the limitation of tying your money up in an account for a certain period of time and risking a penalty for early withdrawal. For that reason, you might wonder if parking your cash in a high-yield savings account might be the better option. You won’t earn that much less, and you’ll also have more flexibility to access your funds when you need them.

As an example, here’s what an investment might look like after one year:

One Year CD vs Savings Account

Amount Invested
(12 months)
CD
(2.22%)
Savings Account
(2.00%)
$1,000 $22.20 $20.00
$5,000 $111.00 $100.00
$10,000 $222.00 $200.00
$15,000 $333.00 $300.00

As you can see in the table, CDs beat out savings, but even at the highest investment amount, you’re earning just $33 more through a 1 year CD than if you parked your cash in a savings account.

The most recent report from the Bureau of Labor statistics on the Consumer Price Index shows the “all items index” rose 2.1% over the last 12 months. So while investing in CDs probably won’t help you get ahead in the long run, they can help you at least make some money in a safe, short-term investment, and that lessens the pain of inflation. Choosing a mixture of investments based on your goals and how soon you’ll need access to your money can help you decide which investments are best.

CD Ladders

CD laddering, as our subsidiary MagnifyMoney explains, is a great strategy to allow you to have frequent access to your money for reinvestment while still using long-term CDs as an investment strategy. If you have $1,000 to invest, it may look something like this:

  • One-year CD: $1,000

  • Two-year CD: $1,000

  • Three-year CD: $1,000

  • Four-year CD: $1,000

  • Five-year CD: $1,000

When the CDs come to maturity, you could continue to reinvest at the current term or go with a longer term, for example, one year. Because of the staggered start times, you’ll have CDs coming to maturity every three months. You’ll usually earn higher rates from your longer-term CDs. However, you’ll still have frequent access to your funds as they mature in your shorter-term investments.