Our Picks for the Top 1-Year CDs With High Rates
One-year CDs are safe investments for funds you’ll need in the medium term. They allow you to lock your interest rate in for a full year even if rates in the market drop during that time.
To bring you the best CD rates from across the country, we compiled data from the research firm Curinos, which analyzes information from over 3,600 banks each day. We’ve also thoroughly researched more than 100 banks, credit unions and fintech companies to find those with the best ratings, highest APYs and lowest minimum deposit requirements for CDs. Learn more about our rating methodology.
We also opened our own CD accounts at 10 of our top recommended banks and credit unions to bring you first-person data not found anywhere else and customer service insights only available to clients.
Whether you’re looking for the top one-year CD rates in the U.S. or a great deal with a top bank, we’ve got you covered. Our picks below for the best one-year CD rates have APYs up to 5.05%.
Rates accurate as of April 24, 2024
Is Now the Right Time To Open a 1-Year CD?
Our recent MarketWatch Guides team CD survey shows that a one-year CD is the most common term length used by consumers. Its short-term commitment coupled with recent high interest rates make it an attractive low-risk investment option – 55% of survey respondents with a one-year CD reported earning an APY above 4%.
While CD rates have dropped slightly in 2024, they’re still at some of their highest levels in more than 15 years. Our experts predict rates will fall later in the year.
Below is a glance at average CD rates trends over the past decade.
“For those considering CDs as an investment, the window to secure a good rate might be narrowing,” said Taylor Kovar, CFP, CEO and founder of Kovar Wealth Management. “Securing a CD sooner rather than later could lock in higher returns before rates drop.”
“If you’ve been eyeing CDs as an investment, you still have some wiggle room to snag decent rates, but don’t dilly-dally too long. Since CD rates are expected to keep slipping in 2024, it’s wise to lock in a rate sooner rather than later to avoid losing out on better deals.”
– Shawn Carpenter, CEO of Stock Alarm
How Do 1-Year CDs Work?
With a one-year CD, you usually make a single opening deposit that you’ll keep in the account until the maturity date. In exchange, the bank guarantees a certain fixed interest rate for the term.
“In an environment where interest rates are dropping, a long-term CD will offer the benefit of continuing to pay the higher interest rate that you are locked into,” said Renee Stene, financial advisor and founder at Weddington Advisors.
CD rates are influenced by several factors. Rates on financial products including CDs usually move in response to the federal funds rate, which is set by the Federal Reserve. The federal funds rate is an interest rate banks use to lend money to each other overnight.
The highest CD rates can often be found with smaller banks and credit unions. This is typically because smaller banks offer higher rates to attract clients and credit unions are member-focused, not-for-profit institutions that return their profits to members in the form of better interest rates.
CD rates are also highly dependent on inflation and market competition from other banks. When inflation is high, CD rates tend to be higher. When inflation drops, CD rates usually decrease. Online banks that are trying to attract customers often offer much higher APYs than big national and regional banks that already have large customer bases.
Over the past year, one-year CD rates offered by some of the top online banks and credit unions we tracked have remained steadily around 4.5% to 5%.
One-year CDs typically offer higher interest rates than three- and six-month CDs because you’re allowing your money to be tied up for a longer amount of time.
If you’re considering a one-year CD, think about whether the maturity date aligns with your savings goals. In our latest CD survey, the number one reason people took out a CD was to take advantage of high interest rates, and the next was to save for long-term goals.
While over 37% of survey respondents used CDs to save for retirement, the financial experts we spoke to recommend that CDs are better used as a safe investment for short- and medium-term needs like a home, trip or wedding.
Types of CDs
CDs come in a variety of product types to suit different savings goals and risk tolerances. Some of the most common types of CDs are outlined below.
Most CDs are traditional, with a fixed rate for the entire term and an early withdrawal penalty if you take principal out before the CD matures. Examples include:
- Quontic Bank: One-year CD at 4.50% APY
- BMO Alto: One-year CD at 5.05% APY
- Marcus by Goldman Sachs: One-year CD at 4.90% APY
A bump-up CD allows you to get a set number of rate increases if the bank offers higher rates during your term. If you think rates will go up, you may want to consider this CD type. Most bump-up CDs have terms that last at least two years. Examples include:
- Ally Bank: Two-year Raise Your Rate CD at 3.75% APY
- Synchrony Bank: Two-year Bump-Up CD at 3.60% APY
A step-up CD automatically increases your interest rate on a schedule, usually every few months. However, the highest rate on a step-up CD probably won’t beat a traditional CD’s rate. Most step-up CDs have terms that are two years or longer. Examples include:
- U.S. Bank: 28-month Step Up CD at 0.35% APY (blended rate)
- TD Bank: Three-year Step Rate CD at 0.10% APY (blended rate)
A no-penalty CD typically has a much lower rate than a traditional CD, but there’s no penalty if you withdraw your money early. This CD type is best for those who may need their funds earlier than the maturity date and aren’t as worried about their rate of return. Examples include:
- Marcus by Goldman Sachs: 11-month No-Penalty CD at 4.70% APY
- Ally Bank: 11–month No Penalty CD at 4.00% APY
YOUR ENDING BALANCE
$1,025
Alternatives to CDs
While a CD is a reliable way to earn money on cash investments, there are several alternatives that offer more liquidity.
Bonds
Bonds often have similar yields to CDs, so they’re a common alternative. CDs are considered a slightly safer investment, but bonds are more liquid than CDs. If you need to access the funds in a bond, you can resell it.
But if interest rates have dropped, you may not get the same rate you opened the bond with, and it may lose value. Bonds repay your interest at fixed intervals and are usually sold in increments of $1,000.
High-Yield Savings Accounts (HYSAs)
High-yield savings accounts have similar interest rates as CDs with the added benefit that you can take your money out any time you need it, unlike CDs, which usually charge a penalty for early withdrawal. However, if market rates go down, your HYSA interest rate could also drop. With a CD, your rate is locked in until the CD’s maturity date.
Money Market Accounts (MMAs)
Money market accounts are hybrids of checking and savings accounts. They generally earn more interest than a regular savings account but less than an HYSA. The benefit is that you often have checks or a debit card for your account, making it easier to use it to pay bills. You might choose an MMA over a CD if you want to earn interest on your money but prefer to be able to spend money from your account.
Frequently Asked Questions
1-year CDs
Many of the financial experts we interviewed recommended getting longer-term CDs in early 2024 because the Fed is expected to cut interest rates later this year. If you already have an emergency fund (preferably in a high-yield savings account), a one-year CD could get you a high return on money you don’t need to access within the next 12 months.
A one-year CD could be worth it if you have cash savings and can live without the money in your CD for one year. Rates for one-year CDs are higher than they’ve been in nearly 15 years, and you can lock a guaranteed interest rate in if you open one of these CDs now.
It’s possible but unlikely that you could lose money with a one-year CD. If the account has an early withdrawal penalty and you take your principal out before the CD term ends, you could pay a penalty that eats into your deposit. The penalty is usually based on the interest that could be earned within a certain time period, and if that amount exceeds the interest you’ve earned so far, your bank could take a portion of your deposit.
Interest Rates
Currently, competitive rates for a one-year CD vary between 4.50% and 5.50% APY. The national average interest rate for a one-year CD is only 1.81%, but the financial institutions on our list offer rates between 4.50% and 5.05% APY.
There are a few CDs with rates close to 6% APY, primarily offered by credit unions, which often have membership restrictions. However, CD rates have declined from their top rates last summer, and it’s much more common to find rates in the 4.75% to 5% APY range.
Taxes
Yes, you’ll be required to pay taxes on the interest your CD earns for the year it was earned. Your financial institution will create a 1099-INT form with the total interest you received which you can use when you file your taxes.
Methodology
Our team researched more than 100 of the country’s largest and most prominent financial institutions, collecting information on each provider’s account options, fees, rates, terms and customer experience. We then scored each firm based on the data points and metrics that matter most to potential customers. Read our full methodology.
For our list of the best one-year CD rates, we selected the highest-scoring financial institutions in our review of CDs. These banks and credit unions provide CD products available to customers throughout the U.S. and earn high scores for offering low or no minimum opening deposit and competitive yields on one-year terms.
We opened 10 CD accounts with the necessary minimum deposits. We then measured the speed and thoroughness of the account-opening process, ease of use of the account website, speed of our deposit to fund the account, rewards and features available to account holders and our experience with customer service chat and phone options.
*Data accurate at time of publication
**Rates accurate as of April 24, 2024
***Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. Weddington Advisors and Great Valley Advisor Group are separate entities from LPL Financial.
Certificates of deposit are FDIC insured and offer a fixed rate of return if held to maturity. There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes. The purchase of certain securities may be required to effect some of the strategies. Investing involves risks including possible loss of principal.
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