11 Best 1-Year CD Rates of 2024
Best Overall
Alliant Credit Union
Vault Verified
APY
5.30%
Min. Deposit Requirement
$1,000
Term Length
1 year
Why We Chose It
Alliant Credit Union makes it easy to become a member and gain access to its competitive CD rates. There are multiple terms to choose from, as well as IRA Certificates to help fund your retirement. Although its 1-year CD comes with a 90-day early withdrawal penalty, it’s lower than many other banks. Read our Alliant Credit Union review.
Pros
- 3 months early withdrawal penalty on 12-month CDs
- Easy to qualify for membership
- Multiple CD types and terms to choose from
Cons
- $1,000 minimum opening deposit requirement
- Jumbo CDs require a $75,000 deposit but only offer 0.05% higher APY
Best 1-Year CD With Fast Account Opening
Quontic Bank
Vault Verified
APY
4.50%
Min. Deposit Requirement
$500
Term Length
1 year
Why We Chose It
Quontic Bank’s 1-year CD comes with a highly competitive 4.50% APY. If you have the $500 minimum balance to fund it, you can open a Quontic CD in under five minutes. The CD comes with a 10-day grace period before it automatically renews, allowing you to remove your funds penalty-free if you don’t want to renew it. Read our Quontic Bank review.
Pros
- Takes 3 minutes or less to open a CD
- $500 minimum opening requirement
- Competitive interest rate
Cons
- Only available online
- Few CD terms to choose from
- 12 month interest early withdrawal penalty
Best 1-Year CD With Minimal Fees
Bread Savings
Vault Verified
APY
5.25%
Min. Deposit Requirement
$1,500
Term Length
1 year
Why We Chose It
The Bread Savings 1-year CD earns a competitive 5.25% with a minimum $1,500 opening deposit. There are no fees with a Bread CD, and if you allow your CD to auto-renew after the 10-day grace period, Bread will reward you with an additional 0.05% APY on a same-term CD. Read our Bread Savings Bank review.
Pros
- No monthly maintenance or hidden fees
- Earn an extra 0.05% upon renewal
- Interest accrues and compounds daily
Cons
- High opening deposit amount of $1,500
- 180-day early withdrawal penalty
- No physical branches
Best 1-Year CD With Competitive Rates
Popular Direct
Vault Verified
APY
5.20%
Min. Deposit Requirement
$10,000
Term Length
1 year
Why We Chose It
Popular Direct offers a competitive 5.20% APY on its 1-year CD, but you’ll need at least $10,000 to fund it. The CDs accrue and compound interest daily, which is credited to the account monthly. Make sure you’re connecting the correct external account to fund a Popular Direct CD—you won’t be able to change it for at least 60 days.
Pros
- Interest accrues daily
- Multiple CD terms to choose from
- No monthly fees
Cons
- Requires a $10,000 minimum deposit
- 270 day early withdrawal penalty
- Credited interest withdrawals are subject to an early withdrawal penalty
Best 1-Year CD With No Opening Minimum
BMO Alto
Vault Verified
APY
5.15%
Min. Deposit Requirement
None
Term Length
1 year
Why We Chose It
BMO Alto takes the top spot in this category with no minimum balance requirement, no fees and the availability of six different CD terms. Plus, interest is compounded daily and paid out monthly. Read our BMO Alto review.
Pros
- No minimum opening deposit
- No minimum balance
- 6- to 60-month CDs are available (for laddering)
Cons
- Online-only bank
- Early withdrawal penalty of 180 days of interest
- Must fund account within 10 days of opening for CDs opened by phone
Best 1-Year CD From an Online Bank
Barclays Bank
Vault Verified
APY
5.00%
Min. Deposit Requirement
$0
Term Length
1 year
Why We Chose It
Barclays offers seven CD term options, with its 1-year CD earning 5.00% APY. There are no minimum balance requirements, but you must fund the account within 14 days or Barclays will close it. Barclays makes it easy to transfer funds into the account, but you’ll face a 90-day early withdrawal penalty if you remove principal funds before the term ends. Read our Barclays Bank review.
Pros
- No monthly fees
- No minimum balance requirement
- Easy to open online
Cons
- Lower interest rate than many competitors
- No physical branches
Best 1-Year CD With Low Opening Minimum
Bethpage Federal Credit Union
Vault Verified
APY
4.00%
Min. Deposit Requirement
$50
Term Length
1 year
Why We Chose It
With a minimum opening deposit of only $50, Bethpage Federal Credit Union takes the top spot in this category. Another notable feature? Unlike many other credit unions, you only need to open a savings account with $5 to become a member.
Pros
- Low minimum opening deposit of $50
- Simple credit union member requirements
- 12-month IRA certificate is also available
Cons
- CDs renew automatically at maturity
- Fees may apply
- Basic information may be hard to find online
Best 1-Year Jumbo CD
All In Credit Union
Vault Verified
APY
5.01%
Min. Deposit Requirement
$100,000
Term Length
1 year
Why We Chose It
For Florida and Alabama residents, All In Credit Union stands out with a competitive interest rate on a 1-year jumbo CD. They also provide 12-month CDs with lower minimum deposit requirements.
Pros
- Very competitive interest rate with a minimum opening deposit of $100,000
- Offers 12-month CDs with lower opening minimum deposits
- Provides a 10-day grace period to close the account or transfer funds after maturity
Cons
- Only available to those living in certain Alabama and Florida counties
- Stricter eligibility requirements for membership
- Online portals may be confusing
Best 1-Year No-Penalty CD
First Mid Bank & Trust (powered by Raisin)
Vault Verified
APY
4.80%
Min. Deposit Requirement
$1
Term Length
1 year
Why We Chose It
First Mid Bank & Trust’s 1-year CD shines because it comes with no early withdrawal penalties and no fees. However, you’ll need to open an account through Raisin, a digital banking platform, to scoop up the best rates.
Pros
- Minimum opening deposit of just $1
- No penalty for early withdrawal
- No fees
Cons
- Account opening process may be slightly confusing
- Opening a CD directly with First Mid entails higher minimum opening deposits and lower interest rates
- No physical branch locations
Best 1-Year CD With a Loyalty Bonus
Ally Bank
Vault Verified
APY
4.50%
Min. Deposit Requirement
None
Term Length
1 year
Why We Chose It
Ally is a standout in this category because of its loyalty bonus for customers who renew their CDs. Plus, there are no fees, and you have the option to add funds at any time. Read our Ally Bank review.
Pros
- 0.05% Loyalty Reward for CD renewals
- Allows additional fund deposits at any time
- Offers the flexibility to change renewal terms up to a year in advance
Cons
- CDs renew automatically
- Step-up and no-penalty CDs are only available for other CD terms
- No physical branches or cash deposits
Best 1-Year CD With a 10-Day Rate Guarantee
Marcus by Goldman Sachs
Vault Verified
APY
4.90%
Min. Deposit Requirement
$500
Term Length
1 year
Why We Chose It
If the rate for the 12-month CD increases within the first 10 days after opening and funding your account, you’ll automatically receive the higher rate. Read our Marcus by Goldman Sachs review.
Pros
- 10-day guarantee rate
- $500 minimum deposit
- Allows withdrawals on interest earned at any time without penalty
Cons
- No physical branch locations
- Early withdrawal penalty equivalent to 180 days of interest
- Additional funds can only be added within 30 days after account opening
1-Year Certificate of Deposit Overview
Let’s dig into the ins and outs of a 12-month certificate of deposit (CD) and how to decide if it fits your financial goals.
What Is a One-Year CD?
A 1-year CD is a savings account where you agree to lock in your money for a 12-month period. In return, you can grow your money at a higher interest rate compared to a standard savings account.
The interest rate for a 1-year CD is typically higher than shorter-term CDs. But these rates are lower than CDs with longer maturities, like an 18-month CD. Additionally, they are FDIC insured, providing protection for your money in the unlikely event of a bank failure.
However, you’ll receive a penalty if you withdraw funds before your CD matures or the 12-month commitment ends. The early withdrawal penalty depends on the bank, but it’s typically several months of earned interest.
How Do CD Rates Work?
Unlike savings accounts, the interest rate on a CD remains constant throughout its term. This consistency simplifies financial planning. Another benefit is that you can enjoy higher-than-average interest rates if you lock in a reasonable rate. On the flip side, you might miss out on higher interest rates if the rates for savings accounts rise.
CDs usually compound interest either daily or monthly, but daily compounding can result in faster growth.
Who Should Get a 1-Year CD?
A 12-month CD could be a strong fit for you if you plan on spending or needing access to your funds in a year. Otherwise, you’ll incur an early withdrawal penalty, which is usually a percentage of the interest earned.
It’s a good idea to look at the money you’ve currently saved, and then determine an amount you can comfortably commit to a CD for at least a year. Maintaining a separate emergency fund can prevent you from preemptively withdrawing from your CD savings.
Pros and Cons of 1-Year CDs
1-year CDs offer several advantages and disadvantages that can influence your decision. Let’s explore these:
Pros
- Safe way to tuck away money for a financial goal
- Potential for higher interest rates and a higher annual percentage yield (APY) compared to high-yield savings accounts
- Flexibility for laddering CDs, potentially yielding higher interest and easier access to your funds
Cons
- Early withdrawal penalties for accessing funds before the maturity date of your CD
- Potentially lower returns compared to stock market investments
- Less liquidity compared to savings, checking or money market accounts
How To Choose the Best 1-Year CD for You
So, you’ve decided that a 12-month CD is the right choice for your financial goals, but there’s no one-size-fits-all solution to determine which CD is best for you. Selecting the right one involves considering various factors.
Minimum Opening Deposit Requirements
Choose a CD with a minimum opening deposit requirement that you can reasonably contribute. If the minimum deposit is beyond your means, it’s not a good fit. Jumbo 1-year CDs offer better rates but also have higher minimum opening requirements. These are only a good fit if you have the required funds to spare.
Interest Rates
One primary motivation for moving funds into a CD is the potential for faster growth. Research which banks offer the most competitive rates for 1-year CDs. Online banks generally offer higher interest rates than brick-and-mortar banks. Additionally, figure out whether interest is compounded daily or monthly. Daily compounding allows you to earn more on the interest rate than monthly compounding.
Term Length
When you’re opening a CD, it may be tempting to choose the longest term length available. After all, the longer your term length, the more you’ll earn in interest. But if you withdraw the money early, you’ll get hit with a penalty, which will negate most of your earnings. So, it’s important to think about what’s realistic for you.
Early Withdrawal Penalties
If you need to access the funds in your 1-year CD before maturity, most banks charge a penalty for early withdrawal. This penalty varies, but it often begins at 60 days of interest earned. The longer the CD term, the heftier the penalty. Some banks provide no-penalty CDs that allow a one-time withdrawal without penalties. In exchange, these CDs usually have lower interest rates than standard 1-year CDs.
CD Types
There are other types of CDs beyond the standard option. Add-on CDs allow additional deposits after the initial one, while step-up CDs offer a one-time rate boost determined by the bank. Bump-up CDs work similarly to step-up CDs, but you decide when to increase the rate. Your choice depends on your financial preferences and goals for the fund.
Alternatives to a 1-Year CD
Although a 1-year CD is a safe way to grow your savings and has fewer risks than investing in the stock market, it isn’t your only option. These other alternatives might work better for your specific needs, situation and timeline:
High-Yield Savings Accounts
A high-yield savings account allows you to earn more than a regular savings account without locking in your funds for a year. However, CD rates may still be higher than the rate offered by a high-yield savings account.
Paying Off High-Interest Debt
While this isn’t a typical method of growing your money through investing or opening a savings account, reducing high-interest debt can be the fastest way to save more money. Focusing on aggressively reducing high-interest debts, such as credit cards, personal loans and private student loans, can help you save more over time. If the interest rate on your debt is higher than what you’d earn through a CD, it might make more sense to prioritize paying off your debt.
Bonds
Treasury, municipal and savings bonds are alternative options for growing your money at a faster rate than a standard savings account, and they carry less risk than stock market investments. However, there’s a small chance that you could lose money on corporate or government bonds, though this scenario is unlikely.
Frequently Asked Questions
Can You Lose Money on a 12-Month CD?
No, a 1-year CD is a safe investment, and you are guaranteed a fixed rate if you keep your funds locked in for the entire term. It’s considered one of the most secure ways to grow your money.
What Is the Average 1-Year CD Paying?
According to the FDIC, the average 1-year CD offers a 1.79% APY (as of October 2023). Many top 12-month CDs, however, offer interest rates of 4% to 5%.
Is a 12-Month CD Worth It?
A 1-year CD can be worth it if you have savings that can be reserved for at least a year. It allows you to earn more interest than a standard savings account, and your money is FDIC insured, providing you with additional security and financial peace of mind.
How much does a $100,000 CD make in a year?
The rate of return on a $100,000 1-year CD depends on the interest rate. At 4.5% APY, you’d earn $4,500 in one year. Earnings would be $3,000 on a 1-year CD earning 3.00% APY. At the national average rate of 1.81% APY, your earnings would be $1,810 after one year.
Newsweek writer Mandy Sleight contributed to this post.
