Best 1-year CD rates of February 2021

The best 1-year CD rates lets you lock your money away for 12 months and earn interest. But most require a minimum opening deposit of $1,000. To help you sort through your options, we researched over 80 CDs and considered factors like interest rates, availability, fees and minimum deposit requirement to bring you the best 12 month CD rates.

What’s changed in 2021?
We added Hiway FCU and American Express one-year CDs to our list.

The 16 best 1-year CD rates

Use the table to compare 1-year CDs by rate, minimum opening deposit and features. Want to compare features side-by-side? Click the “Compare” box next to your top choices to view multiple accounts at once.

Quick summary of the best 1-year CD rates

• CIT Bank Term CDs: 0.3%
• Discover CDs: 0.5%
• Limelight Bank CD: 0.6%
• First National Bank of America Online CD: 0.7%
• Marcus by Goldman Sachs High-yield CDs: 0.55%
• Ally High Yield CDs: 0.6%
• First Internet Bank CDs: 0.6%
• Hiway Federal Credit Union CD: 0.75%

• Rising Bank CDs: 0.5%
• Synchrony Bank CDs: 0.6%
• Alliant Credit Union CD: 0.5%
• Sallie Mae CD: 0.45%
• Barclays Online CDs: 0.3%
• Citizens Access CDs: 0.6%
• Capital One 360 CD: 0.2%
• American Express CDs: 0.2%

How do I find the best 1-year CD for me?

Here’s a few important factors to consider when you compare certificates of deposit:

• The interest rate. The amount of interest applied to your CD will differ between various banks, and the difference can be substantial — shop around at a few different banks to find the best rate.
• Interest payment frequency. With a one-year CD you could choose to have interest earned paid to you monthly, semi-annually or when the account matures.
• Few or no fees. With the exception of the penalty charge for an early withdrawal, there should be no other fees applied.
• Minimum deposit requirement. CDs have balance requirements that differ depending on the financial institution. Some only cater to higher deposits of $5,000 or more, while other banks allow for an account with a minimum balance of just $500.

How much will I earn in a 1-year CD?

See how much interest you could earn over 12 months.

Which bank has the highest 1-year CD rate?

As of February 2021, Quontic Bank has one of the highest 12-month CD rates at 0.65% APY. You’ll need a minimum deposit of $500 to open the CD. But if you withdraw your money before it matures, you’ll pay a penalty equal to one years interest.

Pros and cons of a 1-year CD

There are several attractive reasons to open a 1-year CD, but there are also a few drawbacks to keep in mind.

1-year CD alternatives

If you like the idea of earning a high APY over a relatively short amount of time, but you don’t want to risk facing an early withdrawal penalty, here are three alternatives to consider.

• Shorter-term CDs. Some banks and credit unions offer CDs with terms as short as one month. And while these CDs give you earlier access to your funds, the APYs are often significantly lower than certificates with longer terms.
• High-yield savings accounts. CDs generally offer better interest rates than high-yield savings accounts, but CD rates have recently plummeted due to the pandemic. Now many savings accounts offer higher APYs without the requirement to keep your money locked away for a certain time.
• No-penalty CDs. Although most banks will penalize you if you withdraw funds from your CD before its maturity date, this isn’t always the case. Several banks offer no-penalty CDs that give you access to your money at any time without assessing an early withdrawal fee.

Bottom line

If you’re looking for a secure way to store your money and earn interest over the course of a year, a CD is a useful savings option. However, if you want to add money to your account throughout the year or have access to it in case of an emergency, one of the best savings accounts on the market might be a better fit.

Frequently asked questions

• What is a CD?

  A certificate of deposit, or CD, is an account where you deposit a certain amount of money for an agreed period of time and earn a fixed rate of interest. You can choose how long you want to lock your money away, from as little as one month to five years. If you do need to access your money before the term ends (known as maturity), you’ll likely need to pay a penalty.

• How do I earn interest with a CD?

  With a certificate of deposit, you earn a fixed interest rate for a fixed period of time. For example, if you opt for a 12-month CD, you lock your money away for one year. In return, your bank awards you with a competitive interest rate that’s traditionally higher than a savings account. You can elect to receive interest payments monthly or all at once after your CD reaches maturity.

• Will I be able to choose when the interest is paid into my account?

  In most cases, yes — with longer CDs you are able to choose between monthly, biannual or annual interest payments.

• Do I have to visit a branch to set one up?

  You can, but you don’t have to — a large number of financial institutions offer online CDs.

• Can I have the interest payments made into another account?

  Yes, some banks will allow you to have the interest paid into your checking account.

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