Evergreen Bank Group – 5.50% APY

  • Term (months): 13
  • Minimum deposit: $10,000
  • Early withdrawal penalty: 6 months of interest
  • About: Headquartered in Oak Brook, Illinois, Evergreen Bank Group is a locally owned bank established in 1999.

NexBank – 5.40% APY

  • Term (months): 12
  • Minimum deposit: $25,000
  • Early withdrawal penalty: 6 months of interest
  • About: Founded in 1934, NexBank operates three branches in Dallas and serves customers nationwide with online banking.

BrioDirect – 5.35% APY

  • Term (months): 12
  • Minimum deposit: $500
  • Early withdrawal penalty: 3 months of interest
  • About: BrioDirect is an online-only bank operated by the brick-and-mortar institution Sterling National Bank, established in New York in 1895.

Department of Commerce Federal Credit Union – 5.34% APY*

  • Term (months): 12-23
  • Minimum deposit: $25,000
  • Early withdrawal penalty: Six months of interest
  • Membership: Anyone can join the DCFCU by agreeing to a free membership in the nonprofit American Consumer Council.

*Rates listed in DCFCU's rate charts are 0.10% lower than what's listed here, for a minimum deposit amount of $500. But the fine print indicates that for deposits of $25,000, a 0.10% premium applies.

TotalDirectBank – 5.33% APY

  • Term (months): 12
  • Minimum deposit: $25,000
  • Early withdrawal penalty: Three months of interest
  • About: TotalDirectBank is an online-only operation of City National Bank of Florida, established in Miami in 1970.
  • Note: Not available in Fla. and Calif.

CFG Bank – 5.32% APY

  • Term (months): 12
  • Minimum deposit: $500
  • Early withdrawal penalty: 6 months of interest
  • About: Headquartered in Baltimore with two brick-and-mortar branches in that area, CFG offers select banking products online to customers throughout the country.

State Bank of Texas – 5.30% APY

  • Term (months): 12
  • Minimum deposit: $25,000
  • Early withdrawal penalty: 2 months of interest
  • About: Established in 1987, State Bank of Texas is a family-owned bank that operates eight branches in Texas and Chicago, while serving online-only customers nationwide.

CIBC Agility – 5.27% APY

  • Term (months): 12
  • Minimum deposit: $1,000
  • Early withdrawal penalty: 1 month of interest
  • About: Headquartered in Toronto, CIBC's U.S. operations were established in 1991. CIBC Agility is the bank's online banking arm.

FedChoice Federal Credit Union – 5.25% APY

  • Term (months): 11
  • Minimum deposit: $500
  • Early withdrawal penalty: 3 months of interest
  • Membership: Anyone is eligible for membership by allowing FedChoice to make a donation on their behalf to the FedChoice Charitable Foundation and keeping a minimum balance of $5 in a savings account.

Mountain America Credit Union – 5.25% APY

  • Term (months): 12
  • Minimum deposit: $500
  • Early withdrawal penalty: 3 months of interest
  • Membership: Anyone can join Mountain America by signing up for a $5 membership in the nonprofit American Consumer Council and keeping at least $5 in a savings account.

Limelight Bank – 5.25% APY

  • Term (months): 12
  • Minimum deposit: $1,000
  • Early withdrawal penalty: 3 months of interest
  • About: Limelight is an internet-only division of Capital Community Bank, which was established in 1993 and operates five branches in Utah.

BankPurely – 5.25% APY

  • Term (months): 12
  • Minimum deposit: $1,000
  • Early withdrawal penalty: 6 months of interest
  • About: BankPurely is an entirely digital bank with an environmental and social issues focus. It operates as a division of New York's Flushing Bank.

CommunityWide Federal Credit Union – 5.25% APY

  • Term (months): 12
  • Minimum deposit: $1,000
  • Early withdrawal penalty: Complex formula; refer to disclosures and exercise caution.
  • Membership: Anyone can join CommunityWide by donating $15 to the credit union's local chapter of the Marine Corps, as well as keeping $5 or more in a savings account.

Bread Savings – 5.25% APY

  • Term (months): 12
  • Minimum deposit: $1,500
  • Early withdrawal penalty: 6 months of interest
  • About: Bread Savings is the online consumer deposits bank operated by credit card issuer Comenity Capital Bank.

Popular Direct – 5.25% APY

  • Term (months): 12
  • Minimum deposit: $10,000
  • Early withdrawal penalty: 9 months of interest
  • About: Popular Direct is the online-only arm of Popular Bank, the U.S. banking subsidiary of Popular, Inc., which serves banking customers in the U.S., Puerto Rico, and the Caribbean.

Pros and Cons of 1-Year CDs

Pros

  • Fixed interest rate for a full year

  • Higher APY than liquid accounts

  • Fully predictable earnings and date of withdrawal

  • Extremely safe, with almost no risk

  • Potential deterrent to spending temptations

Cons

  • Early withdrawal of the funds will incur a penalty

  • You can’t add to your deposit

  • If rates rise, you may miss out on a higher rate

  • If rates drop, you may wish you’d chosen a longer CD

Pros Explained

  • Fixed interest rate for a full year: Once you open a CD, you lock in the rate you’ll receive for the full term, no matter what the Federal Reserve does or how other interest rates move. This is a big advantage if rates are predicted to fall.
  • Higher APY than liquid accounts: Banks and credit unions are willing to pay higher rates on CDs, where they know the money will stay put, than on savings, money market, and checking accounts, where you can withdraw funds more often.  
  • Fully predictable earnings and date of withdrawal: Since a CD’s rate and term are fixed, you know exactly when you’ll be able to withdraw the funds and exactly how much interest you’ll have earned by that date. 
  • Extremely safe, with almost no risk: When you open a CD at an FDIC-insured bank or NCUA-insured credit union, you are federally protected on up to $250,000 in deposits, even if the institution fails.
  • Potential deterrent to spending temptations: If you find it hard not to dip into your savings, the early withdrawal penalty on CDs  can serve as a useful roadblock to unwanted spending.

Cons Explained

  • Early withdrawal of the funds will incur a penalty: If you find you need the funds in your CD sooner than the maturity date, you’ll be hit with an early withdrawal penalty that will reduce your earnings.
  • You can’t add to your deposit: Once you decide on your initial deposit amount for a CD, that’s a final decision. You cannot make additional deposits or add money.
  • If rates rise, you may miss out on a higher rate: If rates go up while you own your CD, it means you may have been able to score a higher rate if you had locked in later.
  • If rates drop, you may wish you’d chosen a longer CD: Alternatively, if rates begin declining, you may regret not locking in your great rate for a much longer duration.

Alternatives to a 1-Year CD

A 1-year CD won’t be the best savings option in all cases, of course. Fortunately, there is no shortage of alternatives, depending on your situation:

Longer-Duration CDs

If you can leave your funds untouched for longer than a year, it’s worth shopping the longer terms, such as 18-month, 2-year, or 3-year. You may be able to score a higher rate on one of those. Or you may want to opt for a rate that’s not quite as high, but that will last further into the future. 

Shorter-Duration CDs

If you want to move some of your money from regular savings into a CD, but you just don’t feel comfortable with the year-long commitment, 3-month and 6-month terms are available from most banks and credit unions that sell CDs.

High-Yield Savings and Money Market Accounts

If you simply don’t want to lock your funds in, but want to earn today’s highest rate, the best high-yield savings accounts and money market accounts provide a more flexible option. Just remember that the rates on these liquid accounts can change at any time.

I Bonds

These U.S. government bonds are designed to protect your savings against inflation, hence the name I bonds. But while they sometimes pay rates much better than CDs, sometimes the rate is inferior. Also, you absolutely cannot withdraw your funds until one year passes, not even with a penalty.

U.S. Treasuries

These allow you to lend money to the U.S. government for a fixed amount of time. Considered one of the safest investments in the world, a T-Bill is a note with a duration of up to 1 year. 

Bond Funds

Though it is difficult to research individual bonds, such as corporate offerings, you can easily invest in a bond mutual fund or ETF, which is diversified across many different bond issues. You can also enter and exit the fund at any time.

Money Market Funds or Cash Reserve Accounts

If you have a brokerage account, you can also hold savings in the brokerage’s cash reserve account or their money market fund. Just be sure to research what rate you’ll earn because in many cases, it will be far less than what you can earn in an outside CD, savings account, or money market account.

What Is a 1-Year CD and How Does It Work?

Certificates of deposit are a special type of savings account that have boosted interest rates in exchange for keeping your funds locked up for a fixed amount of time. The reason banks and credit unions are willing to pay higher rates on CDs is because they can generally count on those funds staying in the account, unlike funds that can unpredictably come and go in a savings, money market, or checking account.

Banks and credit unions offer CDs in a variety of terms, from 1 month up to 10 years, so you can choose how long you're willing to lock up your funds. The most common CD terms, however, range from 6 months to 5 years, with 1-year certificates being the most widely available of all.

The date your CD ends is called its maturity date, and although it’s not impossible to withdraw your funds before maturity, you’ll incur a financial penalty if you do so.

When Is a 1-Year CD a Good Choice?

Certificates of deposit are a special type of savings account that have boosted interest rates in exchange for keeping your funds locked up for a fixed amount of time. The reason banks and credit unions are willing to pay higher rates on CDs is because they can generally count on those funds staying in the account, unlike funds that can unpredictably come and go in a savings, money market, or checking account.

Banks and credit unions offer CDs in a variety of terms, from 1 month up to 10 years, so you can choose how long you're willing to lock up your funds. The most common CD terms, however, range from 6 months to 5 years, with 1-year certificates being the most widely available of all.

The date your CD ends is called its maturity date, and although it’s not impossible to withdraw your funds before maturity, you’ll incur a financial penalty if you do so.

What Is the Best Place to Open a CD?

The rates banks and credit unions choose to pay on CDs varies widely, with the top rates in the country typically sitting three to five times higher than the national average, and sometimes even more. So the CD shopper who does their homework stands to earn considerably more interest than if they limit themselves to a CD from their existing bank.

In fact, some of the biggest banks pay among the worst rates. In contrast, smaller brick-and-mortar banks, online-only banks, and credit unions tend to offer substantially higher returns. Shopping from our daily rankings of the best CD rates is an easy way to ensure you’re scoring a top nationwide rate.

If you’ve never held an account at a different institution than where you have your primary checking account, you may be concerned about bank safety. But that’s easy to lay to rest. Any bank that is FDIC-insured, or credit union that is NCUA-insured, carries the same coverage on $250,000 in deposits, per individual and per institution. So if you see that an institution is an FDIC or NCUA member, your protection is the same, whether the institution is big or small, physical or online-only.

You may also wonder about the inconvenience of having your funds at more than one bank. With CDs, however, this is essentially a non-factor, since you won’t be regularly interacting with your CD account. Even with a savings or money market account, internet transfers between institutions are easy these days. But you won’t be making transfers to or from your CD account until you cash out.

What If I Need to Withdraw My Money Early?

Early withdrawal penalties, or EWPs, differ greatly among banks and credit unions. For a one-year term, the most common EWP is three or six months' worth of interest. What that means is, if you cash in your CD before its maturity date, the funds returned to you will be docked by the amount of interest the CD would have earned in three or six months.

But don't assume all EWPs are similar, or even reasonable. You may find one that charges a whole year's worth of interest, while another assesses a mild 30 days' interest. Still others have more complicated or onerous policies that can even eat into your principal. That's why due diligence is critical before funding any CD. You want to be sure you understand what you're signing up for. And when two choices are relatively equal, choose the CD with the milder penalty.

 

Be sure to carefully review the terms of your prospective CD before signing off on it and funding the account. But if you find you've changed your mind about the CD within the first few days of opening it, some banks offer a grace period enabling you to quickly exit penalty-free.

How Do I Open a CD?

Opening a CD is generally no more difficult than opening a savings or checking account. You'll have to provide personal information and be able to identify yourself, but almost all of the certificates in our rankings of the top nationally available CD rates can be opened online within 10 or 15 minutes.

You’ll also need to specify how you’ll fund the new CD. The most common approach is with an electronic transfer from another financial institution. But options to send a check or wire money may be available, depending on the bank or credit union where you’re opening the CD. Note that if you are funding the new certificate with a very large deposit, you’ll want to check with the institution on any external transfer limits that could be an obstacle. 

After opening the certificate, you'll be provided with the written terms of your agreement, which will stipulate the interest rate you'll be paid, the date of the CD's maturity, the frequency with which your interest will be paid and compounded, and the specific penalty calculation that will be used if you request to withdraw your funds before maturity.

After that, CDs are ideally a "set it and forget it" product. You'll receive monthly or quarterly statements showing your certificate's growth, but hopefully you can leave the funds untouched until the maturity date rolls around.

Although the bank or credit union will notify you in advance of the CD maturing, it's wise to set your own calendar reminder sometime well ahead of that, so you can be ready with a decision on what to do with the funds when the CD expires.

Rate Collection Methodology Disclosure

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide, and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the CD's minimum initial deposit must not exceed $25,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.