The best one-year certificates of deposit, or CDs, pay more than most high-yield savings accounts and money market accounts in today’s rate environment. But you need to be prepared to lock away your funds for a year.
A one-year CD is a low-risk way to earn interest on money you don’t need to touch until next year. Some online-only banks and credit unions offer one-year CD rates with annual percentage yields, or APYs, over 5%. With inflation on its way down and the Federal Reserve expected to lower rates this year, banks have slowly started to drop savings APYs. In the last few weeks, the average APY for a one-year CD dropped from 5.24% to 5.07%, based on the banks we track at CNET. So, while APYs remain elevated, now’s the time to lock in a competitive rate.
CNET’s picks for the best 1-year CD rates
|
CFG Bank |
5.25% | $1,000 | 1-year |
| BMO Alto | 5.30% | $0 | 1-year |
| Forbright Bank | 5.10% | $1,500 | 1-year |
| CommunityWide Federal Credit Union | 5.25% | $1,000 | 1-year |
| Bread Savings | 5.35% | $1,500 | 1-year |
|
LendingClub |
5.00% | $2,500 | 1-year |
| MYSB Direct | 5.30% | $500 | 1-year |
APYs as of Feb. 7, 2024.
More details on the best 1-year CD rates
-
APY
APY = Annual Percentage Yield.
- 5.25%
- Min. deposit to open
- $1,000
- Term
- 1-year
CFG Bank has CD terms ranging from six months to three years. There’s a minimum $1,000 deposit. It’s an online-only bank but has several customer service options for assistance, including phone, email and a contact form. You can only deposit funds via wire transfer, electronic transfer or check. Cash deposits are not available.
CFG Bank has CD terms ranging from six months to three years. There’s a minimum $1,000 deposit. It’s an online-only bank but has several customer service options for assistance, including phone, email and a contact form. You can only deposit funds via wire transfer, electronic transfer or check. Cash deposits are not available.
-
APY
APY = Annual Percentage Yield.
- 5.30%
- Min. deposit to open
- $0
- Term
- 1-year
BMO Alto is the online arm of BMO It offers competitive CD rates with no minimum deposit requirements and terms ranging from six months to five years. BMO Alto pays interest on CDs monthly.
However, BMO Alto doesn’t offer specialty CDs or a designated mobile app to manage your account. Instead, you’ll need to use its website. Since BMO Alto is separate from BMO bank, you can’t get help with your account at a physical location, but you can call 855-266-8100 for assistance.
BMO Alto is the online arm of BMO It offers competitive CD rates with no minimum deposit requirements and terms ranging from six months to five years. BMO Alto pays interest on CDs monthly.
However, BMO Alto doesn’t offer specialty CDs or a designated mobile app to manage your account. Instead, you’ll need to use its website. Since BMO Alto is separate from BMO bank, you can’t get help with your account at a physical location, but you can call 855-266-8100 for assistance.
-
APY
APY = Annual Percentage Yield.
- 5.10%
- Min. deposit to open
- $1,500
- Term
- 1-year
Forbright only offers high-yield CDs with limited terms ranging from nine months to five years.
A minimum $1,000 deposit is required to open a CD account, and you can only fund your account through electronic transfer. If you withdraw funds from your CD before the term ends, you’ll pay three months of interest for a one-year term.
Forbright has several branches in Maryland and Virginia but also operates online. Customer service is available by phone and email.
Forbright only offers high-yield CDs with limited terms ranging from nine months to five years.
A minimum $1,000 deposit is required to open a CD account, and you can only fund your account through electronic transfer. If you withdraw funds from your CD before the term ends, you’ll pay three months of interest for a one-year term.
Forbright has several branches in Maryland and Virginia but also operates online. Customer service is available by phone and email.
CommunityWide Federal Credit Union
-
APY
- 5.25%
- Min. deposit to open
- $1,000
- Term
- 1-year
Vio Bank is the online division of MidFirst bank that offers competitive rates on savings products. Peer-to-peer transaction tools such as Zelle aren’t compatible with this bank. Access to savings accounts is provided via online and mobile banking services.
Early withdrawal penalty: 1% of the amount withdrawn, plus a $25 fee.
-
APY
APY = Annual Percentage Yield.
- 5.35%
- Min. deposit to open
- $1,500
- Term
- 1-year
Bread Savings offers CDs and high-yield savings accounts, which require a minimum deposit of $1,500 and $100, respectively. CDs come with a few free services common amongst banks but worth noting — including incoming wire transfers, monthly maintenance and ACH transfers. However, there are a limited number of terms available, only ranging from one to five years. Bread Savings is an online bank but can be reached at 833-755-4354.
Bread Savings offers CDs and high-yield savings accounts, which require a minimum deposit of $1,500 and $100, respectively. CDs come with a few free services common amongst banks but worth noting — including incoming wire transfers, monthly maintenance and ACH transfers. However, there are a limited number of terms available, only ranging from one to five years. Bread Savings is an online bank but can be reached at 833-755-4354.
-
APY
APY = Annual Percentage Yield.
- 5.00%
- Min. deposit to open
- $2,500
- Term
- 1-year
LendingClub offers a traditional certificate of deposit account with five different terms ranging from six months to five years. APYs on CDs are competitively priced. There’s a minimum $2,500 deposit required to open a CD, and it automatically renews with a 30-day grace period.
Keep in mind that LendingClub is an online-only bank, so you’ll need to be comfortable managing your account online.
LendingClub offers a traditional certificate of deposit account with five different terms ranging from six months to five years. APYs on CDs are competitively priced. There’s a minimum $2,500 deposit required to open a CD, and it automatically renews with a 30-day grace period.
Keep in mind that LendingClub is an online-only bank, so you’ll need to be comfortable managing your account online.
-
APY
APY = Annual Percentage Yield.
- 5.30%
- Min. deposit to open
- $500
- Term
- 1-year
M.Y. Safra Bank Direct is a full-service bank that offers a range of checking, savings, money market and CD accounts. When it comes to CDs, MYSB Direct is a solid option since you’ll earn a competitive rate and there’s a wide range of terms to choose from, including no-penalty CDs. And you can use the bank’s online CD calculator to help estimate your return before opening an account.
However, the CDs require a $500 deposit. Another downside is that this bank charges a $5 monthly fee for select accounts. You can visit the local branch if you live in New York City or call 212-652-7200 during business hours. You can also manage your account online.
M.Y. Safra Bank Direct is a full-service bank that offers a range of checking, savings, money market and CD accounts. When it comes to CDs, MYSB Direct is a solid option since you’ll earn a competitive rate and there’s a wide range of terms to choose from, including no-penalty CDs. And you can use the bank’s online CD calculator to help estimate your return before opening an account.
However, the CDs require a $500 deposit. Another downside is that this bank charges a $5 monthly fee for select accounts. You can visit the local branch if you live in New York City or call 212-652-7200 during business hours. You can also manage your account online.
What is a 1-year CD?
A one-year CD is a timed deposit account that earns interest over one year. For example, if you open a one-year CD today, you’ll have access to the funds, penalty-free, in February 2025. Over the course of the year, you’ll earn a fixed rate of interest on your deposit.
Like most CDs, it’s a low-risk way to earn a return, since your account is protected by either the National Credit Union Association or the Federal Deposit Insurance Corporation for up to $250,000 per person, per account.
But CDs differ from savings accounts because you can’t withdraw your money during the CD’s term. If you do, you’ll be penalized with a fee, or you may forfeit accrued interest.
Based on CNET’s daily tracking, you can find one-year CD rates of over 5% at most online-only banks and credit unions. But if you shop around, you may find higher rates and banking features that align with your financial goals.
When the year term ends, you can access your savings, plus interest, without penalty. After maturity, CDs typically have a grace period of seven to 10 days that gives you time to decide whether you want to withdraw the funds, put them in another type of CD or let the CD automatically renew at the current APY.
Factors to consider before opening a one-year CD
Most banks and credit unions offer one-year CDs, but not all of them have the best rates. And many financial institutions have different requirements, such as steep minimum deposits or membership eligibility requirements for local credit unions. Since there are plenty of banking options for this term, you’ll need to narrow down your choices based on your own goals.
Here’s what you should consider:
-
CD type: There are several types of CDs to choose from. While most high-yield CDs let you earn interest, other CDs offer more flexible features, such as the ability to earn more interest or withdraw from the CD early, penalty-free.
-
Compounding schedules: Find out how often interest is added to the principal balance. Interest earned on CDs generally compounds daily or monthly. Interest that compounds daily may yield a slightly higher return.
-
Fees: Choose an account with minimal fees, like monthly maintenance fees, to avoid unnecessary charges.
-
Federal deposit insurance: Choose a bank or credit union that’s FDIC- or NCUA-insured to protect your money up to $250,000 per person, per account.
-
Features: Make sure the bank offers the features you need to manage your money, such as a mobile app, CD calculator or 24/7 customer service.
-
Minimum deposit requirement: The initial deposit required to open the account can vary. Some banks don’t require a minimum deposit, while others require from $500 to $1,500. Look for a comfortable minimum deposit that won’t hamper your other financial goals over the next year.
-
Withdrawal penalties: Look for a CD with a low early withdrawal penalty just in case you need to take out the money before the term ends. Most banks charge three months of interest for withdrawing from your CD before your one-year term ends. If you haven’t earned three months of interest, you may have to cover the fee from your principal balance.
Pros
-
You’ll earn a guaranteed return at a fixed rate.
-
It’s a low-risk investment that’s insured up to $250,000 per person, per account.
-
Your money is available, penalty-free, in one year.
-
Most banks offer this popular term.
Cons
-
You can lose at least three months of interest if you withdraw money from the CD before the term ends.
-
If rates go up, you’ll be locked into the fixed rate until the term ends.
-
You won’t have access to the money for a year.
Should I choose a 1-year CD right now?
You can earn up to 5.55% APY with a one-year CD, but experts believe CD and savings rates are as good as they’re going to get because the Federal Reserve may be done raising rates. Banks don’t have to move in the same direction as the central bank, but they usually do. So, you may want to lock in a rate soon and start earning interest before rates start dropping.
Whether you should open a one-year CD also depends on your financial goals. If you’re saving for an emergency fund or need access to the funds on a whim, you may be better off choosing a high-yield savings account. A one-year CD can provide better returns than savings accounts, but you won’t be able to access the money early without paying a penalty. Savings accounts earn less interest, and your funds can lose purchasing power more quickly during times of high inflation, but these accounts offer more liquidity.
How to open a 1-year CD
When you’re ready to open a CD, here’s what you can expect after you’ve chosen your bank.
-
Complete an application. Usually, you’ll be asked to provide personal information, such as your government-issued ID, Social Security number or Individual Taxpayer Identification Number, physical address or other information.
-
Make your one-time deposit. Once your application is approved, you’ll make a one-time deposit into the CD. Pay attention to the accepted deposit methods. Some banks don’t allow cash or check deposits for CDs. You may be limited to an electronic transfer or direct deposit.
-
Set up online accounts. Once your account is set up, you can create online or mobile app logins to track your CD and interest earned.
FAQs
If the APY offered on your CD increases after you open it, you won’t benefit from the rate increase. When you open a CD, your rate is fixed for the entire term.
There are, however, types of CDs that are exceptions to this rule. For example, bump-up CDs may allow you to request one rate bump per CD term. You could also choose a no-penalty CD, which allows you to withdraw your deposit at any time without penalty and open a new CD with a higher rate.
Fees vary depending on the institution. Some banks advertise no fees. Others charge a fee if the account is closed before a set timeframe has elapsed. Most CDs charge a penalty for withdrawing money before the maturity date. This penalty is generally based on a percentage of the interest earned.
Unless you’re purchasing a brokered CD offered by a brokerage account, CDs purchased through a bank or credit union insured by the FDIC or NCUA are protected for up to $250,000 per person, per account. Any interest earned on the CD is also covered up to insured limits.
Interest generally compounds either daily or monthly. The more frequent the compounding period, the more interest you’ll earn over the CD’s term. Compound interest is desirable because your money will grow faster. Interest is calculated based on the accumulated interest plus the original principal.
A jumbo CD is a CD account that requires a significantly higher initial deposit to open, generally at least $100,000. There are a variety of terms available for jumbo CDs. They earn a fixed-rate APY and the deposit must remain in place for the duration of the term or you’ll be faced with penalties for early withdrawal.
Methodology
CNET reviews high-yield CD accounts based on the latest information posted on bank, credit union and neobank websites. We evaluated APYs, minimum deposits, monthly maintenance fees, minimum balances and other terms and conditions for CD accounts from more than 50 organizations. We selected the CDs with the highest APYs and the best terms for banking consumers.
The banks, credit unions and neobanks we reviewed include: Affirm Savings, Alliant Credit Union, Ally, America First Credit Union, American Express High Yield Savings Account, Axos High Yield Savings, Bank of America Advantage Savings, Bank of the West, Bank5 Connect, Barclays, Bask Bank, Bread Savings, BrioDirect High-Yield Savings, Capital One 360 Checking, Charles Schwab, Chase Premier Savings, Chime, Citibank, Citizens Online Savings Account, Colorado Federal Savings Bank, Consumers Credit Union, Discover, First Internet Bank of Indiana, LendingClub, Live Oak Bank, M&T Bank, Marcus, My Banking Direct, Nationwide My Savings, Navy Federal Credit Union, NBKC, OneUnited Bank, PenFed CU, PNC, Popular Direct Select Savings, PurePoint Financial, Quontic Bank, Rising Bank, Salem Five Direct, Sally Mae Smarty Pig, Santander Bank, Synchrony, TAB Bank, TD Bank, TIAA Bank, Truist Bank, U.S. Bank, UFB Direct, Union Bank, USAA Bank, Varo, Vio and Wells Fargo.
This article includes some material that was previously published on NextAdvisor, a CNET Money sister site that was also owned by Red Ventures and which has merged with CNET Money. It has been edited and updated by CNET Money editors.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
