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A one-year CD offers a secure way to save money and earn a relatively high-interest rate on your savings. Typically, these accounts offer higher average yields than traditional savings accounts do.
Read further to learn more about 12-month CDs, including:
| Bank | APY | Min deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|---|
| Banc of California | 5.13% | $1 | Daily | 90 days interest |
| Barclays | 5.00% | $0 | Daily | 90 days interest |
| BMO Alto | 5.05% | $0 | Daily | 180 days interest |
| Capital One | 4.80% | $0 | Daily | 3 months interest |
| Marcus | 4.90% | $500 | Daily | 90 days interest |
| Ponce Bank | 4.25% | $1,000 | Daily | 270 days interest |
| Quontic | 4.50% | $500 | Daily | 12 months interest |
| Sallie Mae | 4.95% | $2,500 | Daily | 90 days interest |
Why we like it
Currently, Barclays offers an online 12-month CD with a 5% APY, and you don’t have to meet any minimum balance requirements to earn that interest rate or open the account.
You also have up to 14 days to fund your account to lock in the rates at the time you open it, which can help provide some room to make funds transfers if needed.
Barclays 12-month CD: An overview
| APY | Minimum deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|
| 5% | $0 | Daily | 90 days interest |
*Figures are correct as of May 2024.
Why we like it
BMO Alto’s 12-month CD rate is 5.05%, and you don’t need a minimum deposit or balance amount to secure these benefits. While BMO Alto charges an early withdrawal penalty, it waives the fee in cases where any account owner has passed away or been declared legally incompetent, providing some flexibility in these situations.
BMO Alto 12-month CD: An overview
| APY | Minimum deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|
| 5.05% | $0 | Daily | 180 days interest |
*Figures are correct as of May 2024.
Why we like it
Many people already bank with Capital One, making it a known quantity for those researching CDs. Having an existing account with the bank may also make it easier to fund this type of 12-month CD, which has a decent rate. Capital One also lets you choose whether you want your interest paid out monthly or at the end of the CD term.
Capital One 12-month CD: An overview
| APY | Minimum deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|
| 4.80% | $0 | Daily | 3 months interest |
*Figures are correct as of May 2024.
Why we like it
Marcus offers digital tools to help you plan ahead to manage your CDs as they mature, making it easier to ensure your accounts roll over in a way that meets your financial needs. While this one-year CD option does have a minimum deposit requirement, you only need $500, making it fairly accessible.
Marcus 1-year CD: An overview
| APY | Minimum deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|
| 4.90% | $500 | Daily | 90 days interest |
*Figures are correct as of May 2024.
Why we like it
Ponce Bank offers a wide range of terms for its CDs and it currently has a promotion APY of 5.25% for a 13-month CD with a minimum deposit of $1,000. The regular one-year CD rate is currently 4.25%. Ponce Bank also offers a variety of other savings options, making this a good choice for those who want comprehensive savings options with the same online bank.
Ponce Bank 12-month CD: An overview
| APY | Minimum deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|
| 4.25% | $1,000 | Daily | 270 days interest |
*Figures are correct as of May 2024.
Why we like it
It only takes about three minutes to open a Quontic 12-month certificate of deposit amount, and you won’t pay any monthly fees for your account. At the time of writing, you can get 5.05% with a six-month CD, so with this bank, a shorter term may be a better deal.
Quontic 12-month CD: An overview
| APY | Minimum deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|
| 4.5% | $500 | Daily | 12 months interest |
*Figures are correct as of May 2024.
Why we like it
Sallie Mae’s rates are competitive and you can choose from numerous CD term options. While the bank has a higher minimum deposit requirement than any other on this list, it doesn’t charge any monthly fees.
Sallie Mae CDs: An overview
| APY | Minimum deposit | Compounding frequency | Early withdrawal penalty |
|---|---|---|---|
| 4.95% | $2,500 | Daily | 90 days interest |
*Figures are correct as of May 2024.
A one-year CD is a certificate of deposit account with a term of 12 months. Certificate of deposit accounts are a form of savings account that offers a guaranteed rate of return over the published term, as long as you keep your money in the account for that time.
Every CD has a maturity date, this is the date when the agreed-upon term ends. A one-year CD matures after 12 months. Typically, if you withdraw any funds from your CD account before the maturity date, you’ll pay an early withdrawal penalty.
Often, the best CDs offer much higher interest rates than traditional deposit accounts.
CD rates of all types are determined by banks based on the prime rate and other market factors. Banks also consider their own costs and what they can afford to offer, which is why many of the highest rates are offered by online banks with lower overhead costs.
A 12-month CD matures in a year, which means you can withdraw your funds at that time without any penalty.
Once the term has come to an end, you can choose to roll the funds over into another CD and earn interest again. Many banks offer an automatic roll-over process, which means your funds will automatically roll into another 12-month CD. During this process, you typically have a 10 to 14-day grace period after the maturity date to withdraw the funds without any penalty.
As with any other saving option, one year CDs come with several pros and cons. We have compiled a list of these to make choosing your CD term easier.
The average deposit rates for 12-month CDs increased by almost 2% from 2021 to 2024, according to the FDIC. Currently, the rates for CDs with one-year terms can range from 2% CDs to 6% CDs, depending on which bank you have an account with.
It’s always important to read the fine print on account details before you open an account. When researching CD rates, look at the rates for various terms. While long-term CDs historically have higher averages, that’s not true in all markets. Sometimes, you might earn more with short-term investments, as is the case in early 2024.
When you want the best CD rates for a one-year term—or any CD term—shopping around is a good idea. Review account options from online and local banks, credit unions and brokerage firms.
Consider details such as:
The best time to open a 12-month CD is when the rates are high and this type of investment best meets your personal financial needs.
Consider some hypothetical situations below to understand what might be a good time to get a one-year CD:
You can open a one-year CD with an online or a local bank. Begin the process by researching options and comparing rates and other factors to find an account that works well for you. Once you choose an account, complete the application process in a local branch office or online.
With either option, you’ll need to:
In a local branch, you may simply provide information to the bank representative, who completes the forms.
At a minimum, you’ll need a government-issued photo ID. You may also need to provide proof of residency along with contact information and a residential address.
Once your account is approved, you must fund your CD. Some banks have a timeline for this, such as within a few days or two weeks. How you fund your account depends on the type of bank you’re working with, but common options include cash deposits and electronic funds transfers.
A one-year CD can be a worthy investment if you’re looking for a secure way to make more money on your savings. However, this option isn’t a great choice if you’ll need to access your money in the near future.
Before you lock your money into a one-year CD, consider a few alternative investments.
Always consider your personal finance situation and whether you can truly park your cash for the term of the CD you’re looking at. If you think you might need your money sooner than a year, you could consider a shorter term such as three-month CDs or six-month CDs. If you can invest your money for longer, check to see if a 24-month CD offers better returns.
Some of the best three-month CDs include:
Some of the best six-month CDs include:
You can find high-yield savings accounts with APYs of 4% or more, and some online banks may offer rates as high as 5%. The pro of a savings account vs a CD is that you can access your funds at any time. The downside is that your rate isn’t locked in and can change.
Money market accounts combine features of savings and checking accounts. They may require a higher minimum balance than regular savings accounts, though, and come with limits on check-writing capabilities and monthly withdrawals. Money market accounts are suited for individuals seeking a balance between liquidity and earning potential, as you can get a relatively high APY while maintaining easy access to your funds.
If you want to invest in higher-risk but potentially higher-reward opportunities such as stocks, you’ll need an investment account. These types of savings can help you seek quick, high-yield rewards. However, they can be risky, and you can lose the money you put into the account—which isn’t the case with other options on this list.
Bonds are debt securities. When you purchase one, you’re effectively loaning the principal to a company or government that wants to raise money. In return, the bond issuer agrees to pay back the money plus interest after a certain period of time. Bonds are a fixed, secure, and predictable way to earn a little interest. Long-term bonds are good choices for those looking to invest in the future of young children.
These are a specific type of U.S. Treasury bond with a unique interest structure that adjusts periodically to keep up with inflation. Otherwise, they’re similar to traditional bonds.
This is a category of investment that’s backed by the U.S. government. They’re considered very safe, and you can choose terms that range from a few days or months to 30 years. These investments can be a good idea if you want to add a conservative, long-term and secure savings method to an existing portfolio.
A 12-month CD can be a good short-term investment for those looking for a secure, conservative option. If you open an account with a bank offering some of the best one-year CD rates at the time, you can earn a fair amount. However, as a conservative investment, CDs aren’t the highest-yield options on the market.
The best 12-month CD rates fluctuate, and various bank rates can change. However, the highest rates tend to be with online banks.
Many banks compound interest for one-year CD accounts daily. This means interest is calculated on your daily balance, though the total amount may be added in one lump sum to your account each month. Daily compounding is beneficial because you may earn slightly more with this method than you would with monthly compounding.
The only way you’d end up with less than you started with when opening a one-year CD account is if you withdrew money before the maturity date. This is because you might end up losing all of your interest and some of your original principal to early withdrawal penalties.
CDs with reputable banks and financial institutions such as Capital One CDs are considered very safe investments. This is especially true when your account is insured by the FDIC. However, the funds in your account can be put at risk by scammers or hackers. You should always take care to protect your passwords and account information to reduce such risks.
Sarah Stasik is well versed in personal finance thanks to her previous role as a Revenue Cycle Manager for a Fortune 500 healthcare company. Using her inside knowledge and expertise, Sarah often covers topics ranging from insurance and the economics of private healthcare to personal finance and small business management.
With more than a dozen years of writing experience, Sarah has tackled niches that range from technical advances in fintech to personal budgeting challenges. She has covered topics such as insurance and the economics of private healthcare, small business management and accounting, and credit and savings. Her writing focuses on making complex or seemingly daunting financial topics more accessible and providing helpful and relevant resources for readers.
