Certificates of deposits (CDs) are safe savings vehicles for investors looking to avoid risk. If you keep your funds locked up in the bank for the entire term, whether it’s three months, a year, or longer, you can expect to get back your initial deposit plus interest.
A one-year CD likely won’t pay the highest CD rates available in the market. But the benefit short-term CDs offer is the ability to move your money to an account with a higher yield, if one is available.
Calculate how much interest you can earn using Bankrate’s CD calculator, and use your findings to compare offers to see what’s best for you.
Summary of Best 1-year CD rates for October 2021
- Live Oak Bank: 0.75% APY, $2,500 minimum deposit
- Comenity Direct: 0.65% APY, $1,500 minimum deposit
- Quontic Bank: 0.60% APY, $500 minimum deposit
- First Internet Bank of Indiana: 0.60% APY, $1,000 minimum deposit
- Sallie Mae Bank: 0.60% APY, $2,500 minimum deposit
- Ally Bank: 0.55% APY, $0 minimum deposit
- Synchrony Bank: 0.55% APY, $0 minimum deposit
- Marcus by Goldman Sachs: 0.55% APY, $500 minimum deposit
- Limelight Bank: 0.55% APY, $1,000 minimum deposit
- TIAA Bank: 0.55% APY, $1,000 minimum deposit
- TAB Bank: 0.50% APY, $1,000 minimum deposit
- Discover Bank: 0.50% APY, $2,500 minimum deposit
Note: The annual percentage yields (APYs) shown are as of Oct. 20, 2021. Bankrate’s editorial team updates this information regularly, typically biweekly. APYs may have changed since they were last updated. The rates for some products may vary by region.
Bankrate’s guide to choosing the right CD rate
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Methodology for Bankrate’s Best CD Rates
At Bankrate, we strive to help you make smarter financial decisions. We follow strict guidelines to ensure that our editorial content is unbiased and not influenced by advertisers. Our editorial team receives no direct compensation from advertisers and our content is thoroughly fact-checked to ensure accuracy.
Bankrate regularly surveys around 70 widely available financial institutions, made up of the biggest banks and credit unions, as well as a number of popular online banks.
To find the best CDs, our editorial team analyzes various factors, such as: APY, the minimum needed to earn that APY (or to open the CD) and whether or not it is broadly available. All of the accounts on this page are insured by the Federal Deposit Insurance Corp. (FDIC).
When selecting the best CD for you, consider the purpose of the money and when you’ll need access to these funds to help you avoid early withdrawal penalties.
Top banks offering 12-month CD rates for October 2021
Live Oak Bank: 0.75% APY, $2,500 minimum deposit
Live Oak Bank offers seven terms of CDs, from six months to five years. All CDs have a $2,500 minimum deposit requirement.
Live Oak Bank also offers an online savings account, which doesn’t have a minimum balance requirement.
Comenity Direct: 0.65% APY, $1,500 minimum deposit
Comenity Direct launched in April 2019. It’s an online-only bank that offers high-yield savings products and CDs. Comenity Direct offers five terms of CDs.
Comenity Direct is a brand of Comenity Capital Bank, which has been around for 30 years. Comenity is the bank behind many popular branded credit cards.
Quontic Bank: 0.60% APY, $500 minimum deposit
Quontic Bank was established in 2005 and has its headquarters in New York.
Certificates of deposit at Quontic Bank require a minimum of $500 to open. Five terms of CDs, ranging from six months to five years, are available.
In addition to CDs, Quontic Bank also has a money market account, a high-yield savings account and three checking accounts.
Considering the yield and minimum deposit, Quontic Bank has one of the best one-year CD offers available.
First Internet Bank of Indiana: 0.60% APY, $1,000 minimum deposit
First Internet Bank of Indiana was the first FDIC-insured financial institution to operate entirely online, according to the bank’s website. It launched in 1999 and its products are available in all 50 states.
First Internet Bank offers eight terms of CDs, a money market savings account with a competitive yield, a savings account and two checking accounts.
Sallie Mae Bank: 0.60% APY, $2,500 minimum deposit
Sallie Mae Bank offers CDs, a savings account, money market account, credit cards and private student loans.
Sallie Mae Bank offers a competitive yield on all of its deposit products.
Ally Bank: 0.55% APY, $0 minimum deposit
Ally Bank is an online-only bank that has existed for more than a decade. Its CDs offer competitive APYs and few require a minimum deposit.
The bank offers several different types of CDs. In addition to its standard CDs, it has a Raise Your Rate CD, also known as bump-up CD, and a no-penalty CD. The Raise Your Rate CD allows the interest rate to increase once on a two-year CD or twice with a four-year CD, should Ally raise rates.
Ally Bank’s early withdrawal penalties are less onerous than those that apply at most other banks. For example, the penalty applying to CDs maturing in five years is 150 days of interest (usually it’s equal to at least 180 days of interest).
Synchrony Bank: 0.55% APY, $0 minimum deposit
Synchrony Bank has 12 terms of CDs, ranging from three months to five years. Each requires a $2,000 minimum deposit requirement.
Synchrony Bank’s high-yield savings account and money market account, however, don’t require a minimum balance.
Marcus by Goldman Sachs: 0.55% APY, $500 minimum deposit
Marcus is the online-banking unit of Goldman Sachs geared to consumers. Marcus offers nine terms of CDs, three no-penalty CD terms and a savings account.
Marcus CDs require a $500 minimum to open, but its savings accounts have no minimum-deposit requirement.
Limelight Bank: 0.55% APY, $1,000 minimum deposit
Limelight Bank is a division of Capital Community Bank, with headquarters in Provo, Utah. Limelight Bank calls itself a conscientious bank that actively ties its business to eco-friendly initiatives. Savings deposits at Limelight Bank turn into loans for solar projects, according to its website.
Limelight Bank only offers CDs on its website.
TIAA Bank: 0.55% APY, $1,000 minimum deposit
TIAA Bank Basic CDs range in terms from three months to five years and require a $1,000 minimum deposit to open.
TIAA Bank is a division of TIAA FSB. TIAA Bank had nine branches as of September 2021, all in Florida.
TAB Bank: 0.50% APY, $1,000 minimum deposit
TAB Bank was established in 1998 in Ogden, Utah, as a banking service inside truck stops. TAB (Transportation Alliance Bank) serves businesses and individual customers.
It offers several checking accounts, a couple of savings account options, a money market account and CDs in eight terms, from six months to five years.
Discover Bank: 0.50% APY, $2,500 minimum deposit
Discover Bank may be known for its credit cards, but it also offers a wide selection of banking products. It has been offering deposit products online since 2007.
Discover Bank offers CDs ranging in terms from three months to 10 years. It also offers a checking account, money market account and a savings account.
Compare no-penalty CDs
Traditional CDs typically come with early withdrawal penalties that can significantly reduce your earnings. To avoid forfeiting interest for closing out your account before the term officially ends, consider looking for liquid or no-penalty CDs. A no-penalty CD might be a good option during uncertain economic times.
Just keep in mind that the yields associated with no-penalty CDs tend to be lower than the rates tied to traditional CDs.
These four banks offer no-penalty CDs:
- Ally Bank: 11 months; 0.50% APY, $0 deposit to earn top APY.
- Marcus by Goldman Sachs: 7-13 months; 0.25%-0.45% APY, $500 minimum deposit (7-month CD is 0.45% APY).
- CIT Bank: 11 months; 0.30% APY, $1,000 minimum deposit.
- PurePoint Financial: 11-14 months; 0.10%-0.15% APY, $10,000 minimum deposit (11-month CD is 0.15% APY).
1-year CD FAQs
What is a 1-year CD?
Having a one-year CD means that your savings will be tied up for 12 months. Generally, you won’t be able to access your funds during that period of time without incurring an early withdrawal penalty. In exchange, you’ll earn a higher yield than you would from a standard savings account or money market account.
Who should open a 1-year CD?
If you’re not planning to touch your money for a year and believe the benefits of a one-year CD are more attractive than the yield associated with a liquid savings account, then a one-year CD is worth considering.
Today’s top nationally widely available one-year CD pays 0.75 percent APY. That’s not enough to retire on, but it’s a good vehicle to meet short-term financial obligations (like saving for a down payment on a house) that can let your money grow near the rate of inflation without having to worry about missing out on better deals that arrive after you invest.
How CD rates work
Banks and credit unions set their own CD rates based on multiple factors, including inflation, and the rates set by competitors. Changes in Treasury yields and Federal Reserve interest rate decisions are taken into account as well.
Some banks have a 10-day best rate guarantee, meaning you could end up with a better rate if the bank raises theirs within days of your decision to open and fund your account. But generally, once you open and fund a fixed-rate CD, you’re stuck with that APY until your term ends. Over time, the bank may raise or lower the advertised rate for new account holders, but your rate will remain the same.
If you do your research, you’ll find that some institutions offer bump-up or step-up CDs that allow rates to change either upon request or at certain intervals during the term. Rates for these CDs, however, tend to be lower than those tied to fixed-rate CDs.
When reviewing CD rates, pay close attention to the APY. The APY includes the effects of compounding. Compound interest is the interest you earn on interest.
Calculate how much interest you’ll earn as you compare APYs.
Right now, CD rates remain at historic lows, so it pays to shop around to find the best deal. Be sure to research local banks and reputable online banks, where you may be able to find a better rate.
Can you lose money with a 1-year CD?
As long as you choose a one-year CD with a fixed rate — and keep the funds in the CD for the duration of the term — you won’t lose money. If you withdraw before the term of the CD allows, you may be subject to an early withdrawal penalty.
Also, each depositor at an FDIC-backed bank is insured for up to $250,000. No depositor has lost any money on FDIC-insured funds as a result of a bank failure, according to the FDIC website. If you’re concerned about FDIC insurance eligibility, use the FDIC’s Electronic Deposit Insurance Estimator.
It’s also important to factor in rising prices. If the rate of inflation is higher than your CD yield, your purchasing power goes down.
1-year CD vs. other investment accounts
Before you buy a one-year CD, it’s important to find out how it stacks up against other types of investment vehicles. Read on to find out how one-year CDs compare to more liquid accounts, like savings accounts and money market accounts.
1-year CD vs. savings account
CDs with terms lasting for one year often pay more interest than traditional savings accounts. Here’s why: You’re rewarded with a higher yield in exchange for agreeing to leave your money tied up for a set period of time.
What’s more, if you keep money locked up in a CD, it’s harder to access those savings. With a liquid savings account, there is usually no consequence for withdrawing funds (unless you make more than six withdrawals or transfers per statement cycle). Since your CD may have an early withdrawal penalty, you’ll probably think twice about raiding your savings.
Another benefit one-year CDs have over savings accounts is the guaranteed rate that applies for the full term. Savings account rates can change at any time as a result of changes in an interest rate environment or a bank’s priorities. That means over time, your rate of return could decline.
There are downsides to choosing a one-year CD over a savings account. Because CDs traditionally are not liquid accounts, it’s best to keep your emergency fund in a savings account. That way, you can easily access the funds you need to cover an unexpected expense without paying a penalty. Additionally, just as savings account interest rates can go down, they can also go up. By locking your money up in a CD, you could miss out on an opportunity to earn more interest.
1-year CD vs. money market account
Another option is parking your cash in a money market account. At some banks, the money market account requires a higher minimum deposit and pays more interest than the institution’s savings account.
Compared to money market account rates, however, one-year CD rates tend to be higher. In many cases, you can qualify for one of the top 12-month CD deals without having to fork over a large amount of cash. At banks with a tiered interest rate structure, you may have to deposit more money to earn the top money market account rate.
Like savings accounts, money market accounts are worth considering if you’re not interested in tying up money for months or years at a time. You can easily withdraw your savings at any time without penalty, and at some banks, you’ll have access to a debit card. Keep in mind that money market accounts are usually limited to a maximum of six convenient transfers or withdrawals per month or per statement cycle because of Regulation D. There may be a fee for exceeding this limit. But these days some banks are allowing more transactions per statement cycle on savings deposit accounts. Union Bank, for instance, currently doesn’t have limits on the number of checks you can write from its MoneyMarket account.
1-year CD vs. a 5-year CD
While a five-year CD might have a higher APY, a shorter-term CD can be a better option. CD rates could change significantly in a year and you might not want to miss out on a good deal. Given the current interest rate environment, however, going with a long-term CD like a four- or five-year CD doesn’t make sense for many people.
Carefully weigh the pros and cons, and consider using a CD laddering strategy to take advantage of different CD term lengths.
Here are the best 1-year CD rates for October 2021
Learn more about other CD terms:
Banks usually offer CDs across multiple terms. Depending on the institution, you may have the option of choosing an account maturing in less than a year. There are also CDs that mature in as many as 10 years.
Carefully consider your financial goals and needs. Weigh your options and make an informed decision about what CD is right for you. You might be perfectly fine with a short-term, one-year-CD. Or you may find that you’re better off opting for an account with a longer term.
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