Insider’s experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.
As of August 2022, the average rate for a 1-year CD in the US is 0.31%, according to the FDIC. However, some online pays pay over 2.25% APY right now.
A 1-year may ideal if you’d like to maintain a solid interest rate for a relatively short time. If you choose a 1-year CD, you’ll also have the chance to earn a higher interest rate if rates are up in a year. Interest rates on savings accounts are expected to slowly rise over the course of the year.
Ally High Yield Certificate of Deposit
Why it stands out: Ally is one of the few banks that doesn’t require a certain amount to open a CD, so you can save regardless of how much money you have. Ally also charges low early withdrawal penalties.
APY for 1-year CD: Ally High Yield Certificate of Deposit
1-year CD early withdrawal penalty: 60 days of interest
What to look out for: Other types of CDs. Ally also offers an 11-month No Penalty CD, and a 2-year and 4-year Raise Your Rate CD that allows you to increase your APY if Ally’s rates also go up during the term. You may want to consider whether either of these options appeal to you more than an Ally High Yield CD.
Marcus by Goldman Sachs High-Yield CD
Why it stands out: Marcus pays one of the highest rates in the industry, and its mandatory $500 deposit is lower than what many banks require.
APY for 1-year CD: Marcus by Goldman Sachs High-Yield CD
1-year CD early withdrawal penalty: 270 days interest
What to look out for: Its 270 days interest penalty is higher than many competitors’ fees for a 1-year CD. If you’re worried about needing to withdraw early, you may be interested in using another bank or opening a Marcus No-Penalty CD. Or, you may want to look at high-yield savings accounts, which allow you to withdraw at any time.
Synchrony CD
Why it stands out: Synchrony pays competitive rates. If you’re not positive you want a 1-year CD, then Synchrony has plenty of other term lengths to choose from.
APY for 1-year CD: Synchrony CD
1-year CD early withdrawal penalty: 90 days simple interest
What to look out for: Although Synchrony has a variety of term lengths overall, you can find ones longer than 5 years elsewhere.
First Internet Bank of Indiana Certificate of Deposit
Why it stands out: First Internet Bank of Indiana pays a good rate for 1-year CDs, and contrary to what the bank’s name may lead you to believe, this online bank is available to residents of all US states.
APY for 1-year CD: First Internet Bank of Indiana Certificate of Deposit
1-year CD early withdrawal penalty: 180 days interest
What to look out for: First Internet Bank of Indiana compounds your interest monthly, not daily, so you’ll earn less in the long run. Depending on how much money is in your CD, this may or may not make a significant difference.
Discover CD
Why it stands out: Discover’s rates are competitive for a 1-year CD. The early withdrawal penalties also are decent for its short-term CDS.
APY for 1-year CD: Discover CD
1-year CD early withdrawal penalty: 6 months
What to look out for: You’ll need at least $2,500 to open a CD with Discover, which is a bit high compared to other banks. You can find a low minimum opening deposit and lower early withdrawal penalties elsewhere.
Bread Savings High-Yield CD
Why it stands out: Bread Savings pays competitive rates.
APY for 1-year CD: Bread Savings High-Yield CD
1-year CD early withdrawal penalty: 180 days simple interest
What to look out for: Minimum deposit and early withdrawal penalty. You’ll need at least $1,500 to open a CD, and you can find lower early withdrawal penalties with some of our other top picks.
First National Bank of America Certificate of Deposit
Why it stands out: First National Bank of America’s main strength is its high APYs.
Interest for 1-year CD: First National Bank of America Certificate of Deposit
1-year CD early withdrawal penalty: 180 days interest
What to look out for: Early withdrawal penalty. The 180-day penalty isn’t as harsh as what some banks charge, but you can still find lower fees at some of our other top picks.
American Express® Certificate of Deposit
Why it stands out: American Express pays a competitive interest rate on its 1-year CD and requires a $0 opening deposit.
Interest for 1-year CD: American Express® Certificate of Deposit
1-year CD early withdrawal penalty: 270 days interest
What to look out for: Early withdrawal penalty. The early withdrawal penalty is a bit steep, so you might want to consider other options on our list or choose a different CD term.
Other 1-year CDs we considered
We looked at the following 1-year CDs as well. These CDs ultimately weren’t chosen among our top picks because they may have lower rates than our winners, higher minimum opening deposits, or more substantial early withdrawal penalties. You might find some of these options appealing though, depending on your preferences.
Capital One 360 CDsPentagon Federal Credit Union Money Market CertificateCIT Bank CDRisingBank Certificate of DepositAmerant CDBrioDirect High-Yield CDCFG Bank Certificate of DepositTIAA Basic Certificate of DepositConnexus Share CertificateBank5 Connect High-Yield CDSallie Mae CDNBKC CDLive Oak Bank CD
Which bank is the most trustworthy?
We’ve compared each banks Better Business Bureau score. The BBB grades businesses based on factors like responses to customer complaints, honesty in advertising, and transparency about business practices. Here is each company’s score:
InstitutionBBB gradeAlly C-Marcus by Goldman SachsA+SynchronyA+First Internet Bank of IndianaA+DiscoverA+Bread SavingsA+First National Bank of AmericaA+American Express National BankA+
Ally is the only institution on our list that doesn’t have an A+ rating from the BBB. According to the BBB, Ally has a C- rating.
Something to keep in mind is that a BBB rating isn’t necessarily the end-all-be-all. If you’d like to see if a companies a good fit, talk to current customers or read online reviews too.
None of our top picks have been involved in any recent public controversies.
Why trust our recommendations?
Personal Finance Insider’s mission is to help smart people make the best decisions with their money. We understand that “best” is often subjective, so in addition to highlighting the clear benefits of a financial product or account — a high APY, for example — we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don’t have to.
Frequently asked questions
What is a CD?
A CD, or certificate of deposit, is a time-sensitive savings account that usually holds your money at a fixed interest rate for a specified period of time. If you don’t need immediate access to your savings, a CD can guarantee a return on your money since you lock in a fixed APY for the term of the CD.
With most banks, you typically won’t be able to deposit more money or access your funds before the CD matures without paying a penalty.
You will, however, earn interest on the amount and have the option to collect those payments monthly or reinvest them into your CD. Most banks offer varying rates for different terms and deposit amounts — in many cases, the longer the term, the higher the rate.
At the CD’s maturity date, you’ll typically have a 10- to 14-day grace period in which you can withdraw your money and close the account or renew the term.
What is a 1-year CD?
With a 1-year CD, you stash away your money for 12 months and typically earn a fixed rate. You have the option to renew your CD at the end of the year, or close the account and pocket the money.
How do CD rates work?
Most CDs lock in your rate for the entire term. For example, if you open a 1-year CD at a 0.50% APY, you’ll earn 0.50% for the entire year. If you renew your CD after it matures, you’ll earn the new rate available in a year.
There are exceptions to the fixed-rate rule. Some institutions offer variable-rate CDs or CDs that allow your rate to change after a predetermined amount of time.
Which is best: a 1-year, 3-year, or 5-year CD?
Terms of one, three, and five years are some of the most common CD options. Your choice will likely depend on how soon you plan to need the money and which term pays the highest rate. For the most part, longer terms pay higher rates — but that isn’t always the case.
Also, going for a shorter term gives you the opportunity to snag a better APY if rates are up in a year. With a 3-year or 5-year CD, you could miss out on higher rates. But on the other hand, you could avoid lower rates with a 3-year or 5-year term if rates drop later.
Many experts recommend CD laddering. With this strategy, you open multiple CDs with different term lengths so you can take advantage of higher rates with longer terms, but also access some of your money earlier. For instance, you might open 1-year, 3-year, and 5-year CDs at the same time, which means you’ll get some of your money back in one year, then more in three years, then more in five years.
See Insider’s picks for the best CD rates »
Which is better, a 1-year CD or a high-yield savings account?
The choice between a 1-year CD and high-yield savings account will depend on several factors.
First, a bank typically pays a higher rate for a 1-year CD than for a high-yield savings account. However, that’s not always the case, and the rates can be pretty close.
But a 1-year CD locks in your rate for the entire year. If rates are dropping, this could make the CD a better choice, because your savings account APY could decrease throughout the year. If rates are rising, the savings account might be a better fit, because your rate could go up.
It also depends on when you’ll need to access your money. You should be able to access funds from your savings account regularly — but if you need access to money from your 1-year CD before it matures, then you’ll have to pay a fee.
You can also continuously add money to your savings account, whereas most 1-year CDs block you from making additional deposits after opening the account.
See Insider’s picks for the best high-yield savings accounts »
Which is better, a 1-year CD or a money market account?
Like with a high-yield savings account, you may prefer a money market account over a CD if you want quick access to your money. Money market account rates also fluctuate, so you may prefer a money market account if rates are rising, but a CD if rates are dropping.
Many banks require higher deposits for money market accounts than CDs, which could affect your decision. It’s also good to remember that you can add more funds to your money market account over time, while a CD only allows an opening deposit.
See Insider’s picks for the best money market accounts »
Which is better, a 1-year CD or another investment account?
CDs aren’t generally considered investments the same way something like an index fund, which puts your money into the stock market, is. Instead, a CD is typically viewed as a type of savings account, and your potential for losses and gains — your risk — is much more limited. Because the stock market is risky, experts generally don’t advise investing money you’ll need in the next five years. In the case of a stock market drop, you wouldn’t have time to make up your losses.
If you need to access your money in a year and want a guaranteed rate of return, a 1-year CD is a better choice than a different type of investment account.
If you’re comfortable parting with your money for longer and want to take more risk with your money, then you may want to invest in the stock market. One way to do this is through tax-advantaged retirement accounts, like a 401(k) or IRA, which grows your money over decades. Another is through brokerage accounts, which are useful tools to build long-term wealth, but can’t guarantee a given return like a CD can.
There is such a thing as an IRA CD, which is sort of a combo savings/investment account. It’s a safe investment tool that may be a worthwhile option for people who are close to retirement age.