October 30, 2023

1 Year CD Rates

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Save for next year with a 1-year CD. Here are some of the best 1-year CD rates today.

Top 1-year CD Rates:

Want to grow your savings or hold off on spending for next year?

A 1-year CD can be a good way to curb spending and earn interest at the same time. It is a low-risk investment that lets you lock in high rates for a year.

Continue on to know if a 1-year CD suits you, how you can make the most out of it, and what alternatives you can consider.

What is a 1-Year CD?

A 1-year CD (also known as a 12-month CD) is a savings account where you deposit a fixed amount of money for one year at a fixed APY.

You usually can't withdraw your money until the CD matures without paying a penalty. But, you do get a higher APY compared to a simple savings account.

How much interest will a 1-year CD earn?

How much you earn on a 1-year CD depends a lot on what your APY is and the amount in your CD. If you had $10,000 in a 1-year CD with an APY of 5% then you'd get $500.

Here's a table to illustrate how the APY and amount impact what you earn on a 1-year CD.


If you have different terms and rates in mind, here's a simple CD calculator you can use to check how much you can earn on a CD.

CD Calculator

Where do you typically search for the best 1-year CD rates?

Is a 1-Year CD Worth It?

A 1-year CD's worth will depend on your financial goals. If you won't need the money soon, a CD provides passive income and access when you need it.

However, if you're building an emergency fund, a 1-year CD may not be ideal due to restricted access and potential early withdrawal penalties.

In general, CDs are most beneficial when interest rates are high and you're comfortable with locking away your funds.

Can I Lose Money on a 1-Year CD?

In most cases, you won't lose money on a 1-year CD. CDs are safe investments, as they're federally insured for up to $250,000. The Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA) will cover your deposits in case your bank or credit union fails.

That's not to say you can't lose some of your potential earnings. The most common reason why you can lose money on a CD is from early withdrawal fees if you withdraw before maturity.

Pros and Cons of a 1-Year CD

1-year is one of the most common terms in the market. It's best to take your time to shop for them. Here are the pros and cons of getting a 1-year CD to get you sorted.


Lock in high interest rates.
You get high, fixed interest rates during the 1-year CD term. This means your rate stays the same regardless of the market changes throughout the year.

A 1-year CD is a safe, low-risk investment. Funds deposited in your CD are federally insured and returns are guaranteed.


Limited flexibility.
If you need access to your money within a year, a 1-year CD is not a good choice. In most cases, you will have to pay a penalty fee for closing your CD before maturity. You can't deposit more money either.

Can I withdraw money from my 1-year CD?
Like most CDs, you cannot withdraw from your 1-year CD without paying penalties. The main draw of CDs is the high rate in exchange for committing a fixed amount of money for a fixed term. But if you need to withdraw your CD before maturity, consider no-penalty CDs to avoid early withdrawal fees.

Interest rate changes.
When you lock in a rate just before the market rate climbs up, you can potentially miss out on better rates that come later on. Remember that CD rates can change in a span of weeks, even more so in a year.

Your 1-year CD may not grow fast enough to keep up with the inflation rate changes since the APY is fixed. Make sure you get a high enough APY on your CD if inflation is expected to increase a year from now.

How to Get the Best 1-Year CD

A 1-year CD is one of the most common CD terms available. If you're on the hunt for one, here are three questions to filter your choices.

What is the APY?
The good news is some of the best CD rates are offered on 1-year CDs. You'd want the highest APY to maximize your earnings on a CD. Search for the best options available to you before you commit.

What is the minimum deposit required?
Some CDs have minimum deposit requirements. If you don't want to lock up a large amount of money for a year, make sure you choose a CD with little to no deposit requirements.

How much is the early withdrawal penalty?
Penalties for 1-year CDs usually range from a few to several months of interest. If you might need to close your CD early, look for CDs with lower penalties. Better yet, find no-penalty CDs to avoid paying any fees.

What is most important to you when considering a 1-year CD?

How to Maximize Interest on a 1-Year CD

Here are some ways you can maximize your chances of getting high returns on your 1-year CD.

Shop for the best rates.
The goal is to get the highest APY available. So, take your time when looking for 1-year CDs. For better rates, check out online banks and credit unions.

If you're a loyal customer of an institution, talk to an account manager to see if you are eligible for relationship CD rates.

Go for Jumbo CDs.
If you have extra savings, try getting a 1-year jumbo CD. Jumbo CDs typically give better rates than standard CDs when you meet the higher deposit requirement (usually a minimum of $100k). With a higher deposit, you can increase your earnings.

Build a CD ladder.
You can use a 1-year CD in a CD ladder to increase your returns. A CD ladder is a strategy where you split up your money into multiple CDs with different rates and terms.

Thus, your funds can be more liquid with short-term CDs maturing every interval. You can also take advantage of the high rates offered on short-term CDs these days.

Check potential returns on your CD ladder with a 1-year CD using this CD Rate calculator.

Will 1-year CD rates go up?
You can make an educated guess by observing the Fed Funds rate and Treasury Yield changes. CD rates will typically follow their movement. If they increase, CD rates may increase as well.

Remember that a high-interest rate environment is a good time to get CDs. But, there is no guarantee that 1-year CD rates will go up or down.

Alternatives to 1-year CDs

A 1-year CD might not be the best option for you, here are alternatives you can consider:

High-Yield Savings Account
Try getting a high-yield savings account if access to your funds is important. You get the flexibility to add and withdraw funds at any time. These are good for short-term goals, emergencies, or simply savings. But rates may change over time, unlike CDs.

Compare Savings Account Offers

Money Market Accounts
A money market account, similar to a savings account, allows you easy access to your money. Some even come with a debit card, ATM access, and check-writing abilities. However, the rate may also be lower and can change during the year.

Compare Money Market Account Offers

Treasury Securities
To lock in rates for a year like 1-year CDs, check out Treasury bills, notes, and bonds. These are backed in full faith by the government. These make them a safe and reliable investment for a year.

Longer-term CDs
If you can go beyond 1 year, some longer-term CDs offer competitive rates and minimal to no deposit requirements. You can look for no-penalty CDs with longer terms to get flexibility and avoid early withdrawal fees.

Longer-Term CD Rates:

What is an odd-term CD?
Odd-term CDs are those CDs with non-standard term lengths. These are CDs with unusual terms like 5-months, 9-months, 13-months, etc. and they usually come with very competitive rates.

Banks and credit unions often offer odd-term CDs as promos only, so they don't stick around forever. Be on the lookout for these CDs for potentially higher rates.

1-year CD FAQs

Who should get a 1-year CD?
A 1-year CD is best for those who want to stable interest earnings. In fact, if you have a financial goal to meet in one year, you can earn without hassle when you opt for a 1-year CD.

It is also ideal for people who don't need immediate access to their funds and are okay with making a (relatively) short-term commitment.

When is the best time to get a 1-year CD?
The rule of thumb is to get a CD when interest rates are at their highest. CD rates typically move with the Fed Funds rate and the Treasury Yield. Thus, following their trend will help you decide when to get a 1-year CD.

What other CD terms are available?
CD terms can range from as short as 1 month and up to 10 years in length. But not all banks will offer the same CD terms. If you can't find a 1-year CD in a particular bank, try shopping around other banks and credit unions.

What CD term should I choose?
The CD term you choose will highly depend on your financial goals. Tip: A smart goal is a measurable goal. Estimate your goal's timeline and choose a CD term based on that. CD terms range from 1 month to 10 years, so you have many options to match your goals.

What are the types of CDs?
Here's a list of different types of CDs available.

  • Term CD: standard CDs with fixed rate for fixed term
  • No-Penalty CD: allows you to withdraw money early without any withdrawal penalties
  • Bump-Up CD: includes an option to increase your rate during the term of the CD
  • Add-on CD: includes an option to add more deposits to your CD balance
  • Jumbo CD: for large deposits of usually $100,000+
  • IRA CD: offers tax advantages for retirement savings

Bottom Line

If you want guaranteed passive income in the next year or if you're looking to preserve your savings until then, a 1-year CD could be a good option.

While returns are modest compared to riskier investments, whether or not you should open one really depends on your financial goals and situation.

Just remember that early withdrawals may pose challenges, so assess your risk tolerance and check other options before choosing CDs.

Write to Rue Atanacio at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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