CDs are available in different term lengths, ranging from three months to five years. Recently, 1-year CDs have become popular due to their high APYs, with rates topping 5.00%. This makes it a good time to consider putting your money in a high-yield CD. Banks have been raising interest rates to attract customers, and CDs are a great option. They offer a guaranteed rate of return for the entire term, regardless of the state of the economy. Here are some of the best 1-year CD rates available right now.
1. Alliant Credit Union: Minimum deposit of $1,000. Pros: Open to anyone, available in standard, jumbo, and IRA versions. Cons: Higher minimum deposit than some online banks, 90 days early withdrawal penalty.
2. Popular Direct: Minimum deposit of $10,000. Pros: Daily interest compounding, 24/7 customer service. Cons: Higher minimum deposit than most online banks, 270 days early withdrawal penalty.
3. Bethpage Federal Credit Union: Minimum deposit of $50. Pros: Open to anyone, lower minimum deposit than many online banks. Cons: 90 days early withdrawal penalty.
4. BMO Alto: Minimum deposit of $0. Pros: Option for monthly interest payouts, 24/7 customer service. Cons: 180 days early withdrawal penalty, no access to BMO Harris branches.
5. Citizens Access: Minimum deposit of $5,000. Pros: Option for monthly interest payouts, quick and easy account opening. Cons: Higher minimum deposit than many online banks, 90 days early withdrawal penalty.
6. Barclays Bank: Minimum deposit of $0. Pros: No minimum deposit requirement, monthly interest payouts. Cons: 90 days early withdrawal penalty.
7. Bread Savings: Minimum deposit of $1,500. Pros: Bonus rate when renewing CD, option for monthly interest payouts. Cons: Higher minimum deposit than some online banks, 180 days early withdrawal penalty.
8. First Internet Bank of Indiana: Minimum deposit of $1,000. Pros: Transparent product information, quick and easy account opening. Cons: Higher minimum deposit than some online banks, 180 days early withdrawal penalty.
9. Merrick Bank: Minimum deposit of $25,000. Pros: Option for monthly interest payouts. Cons: High minimum deposit, limited customer service hours, 90 days early withdrawal penalty.
10. CIBC Bank: Minimum deposit of $1,000. Pros: Smallest early withdrawal penalty (30 days of interest). Cons: Difficult website navigation, poorly rated mobile app.
11. Limelight Bank: Minimum deposit of $1,000. Pros: Bank donates to solar energy initiatives. Cons: Difficult to find product details on website, 90 days early withdrawal penalty.
A 1-year CD is a fixed-term deposit that pays a fixed interest rate for 12 months. You can’t add or remove money during this period. If you need to withdraw your cash before the CD matures, you’ll have to pay an early withdrawal penalty. In exchange for keeping your money locked up, you receive a higher APY than you would in a savings or money market account.
When the CD matures, you can choose to close it and withdraw the cash or renew it at the current interest rate. Some banks allow you to withdraw the interest each month, providing an income stream. However, this reduces the APY as you lose the benefit of compounding.
A 1-year CD is a good option if you have cash you won’t need for the next 12 months and want to earn a strong return with low risk. It’s insured up to $250,000 per depositor, per account ownership type. If you need your money sooner, consider a shorter-term CD or a high-yield savings account.
If you don’t need the cash for a longer period and want to lock in a strong APY before rates fall, consider a CD with a maturity period of 24, 36, 48, or 60 months. Various factors, such as the Federal Reserve’s decisions and competition among banks, affect CD rates. The recent interest rate hikes have brought rates to their highest level since early 2001.
Note: The original content has been edited for clarity, coherence, and conciseness.