Certificates of deposit (CDs) are safe vehicles for investors hoping to avoid taking on too much risk. If you keep your funds locked up in the bank for an entire term (such as three months or one year), you can expect to end up with your initial deposit plus interest.

A 12-month CD won’t pay the highest CD rates in the market. But when your account comes due, you’ll be able to move your funds into an account with a more attractive yield.

Summary of best 1-year CD rates for December 2019

Financial Institution APY Minimum Deposit
America’s Credit Union 2.38% $1,000
Quontic Bank 2.25% $2,500
TAB Bank 2.25% $1,000
CommunityWide Federal Credit Union 2.25% $2,500
Dow Chemical Employees’ Credit Union 2.25% $500

“(It’s) better to maintain a bias toward shorter maturities and have the flexibility to reinvest as interest rates rise,” says Greg McBride, CFA, Bankrate chief financial analyst.

Calculate how much interest you can earn using Bankrate’s calculator, and use that information to compare offers to see what works best for you.

Compare: Best 12-month CD rates for December 2019

Best Overall: America’s Credit Union – 2.38% APY, $500 minimum deposit

America’s Credit Union offers today’s top nationally available 12-month CD rate. Members also have access to a number of share certificate specials paying competitive yields with a low $500 minimum deposit. IRA share certificates are available, too.

Membership at the credit union is open to anyone who lives in the Pacific Northwest, including members of the Armed Forces and their family members, civilian personnel, veterans and military retirees. Anyone who becomes a member of the Pacific Northwest Consumer Council may also join.

Originally named Fort Lewis Federal Credit Union, America’s Credit Union was founded in 1954 by a few civilian employees of the U.S. government. Today the credit union is headquartered in DuPont, Washington, and has 15 new branch locations in Pierce and Thurston counties.

Runner-up: Quontic Bank – 2.25% APY, $1,000 minimum deposit

Quontic Bank offers CDs ranging from 12 months to five years. CDs are easy to open online. Interest is compounded daily and credited to accounts on a monthly basis. Just note that early withdrawal penalties for the bank are quite harsh. For CDs maturing in 12 months to under 24 months, the penalty is one year of interest. If the amount of accrued interest is higher than the penalty amount, what’s left over is paid out. If accrued interest is less than the amount of the penalty, the principal balance of the CD could be reduced.

Quontic Bank is headquartered in Astoria, New York. The bank has one local branch and offers its products online as well. In addition to CDs, customers have access to financing solutions such as VA and FHA loans.

High Rate: TAB Bank – 2.25% APY, $1,000 minimum deposit

TAB Bank offers CDs across most standard terms, ranging from six months to five years. Interest is compounded daily and once it’s credited, it can be withdrawn at any point during the term, without penalty.

Penalties for withdrawals of the principal balance depend on the term. For CDs maturing in one year or less, the penalty is equal to 90 days of interest on the amount withdrawn.

The bank offers financial services to businesses in the transportation industry and was founded in 1998. TAB Bank, also known as Transportation Alliance Bank, is based in Ogden, Utah.

High Rate: CommunityWide Federal Credit Union – 2.25% APY, $1,000 minimum deposit

CommunityWide Federal Credit Union has one of today’s highest 12-month CD rates. The minimum deposit is relatively low compared to what other banks and credit unions require from members and customers interested in CDs or share certificates. But as with other traditional CDs, there’s a price to pay for withdrawing your money before your account matures (equal to the amount of the withdrawal times the remaining number of days at the rate of two times the current annual percentage rate paid).

The credit union is based in South Bend, Indiana. With 11 office locations in Northern Indiana, it serves thousands of members nationwide. Membership is open to anyone who makes a $5 donation to Michiana Goodwill Boosters or the Marine Corps League of St. Joseph Valley. You can also join if you’re an immediate relative in the same household as a qualified member or you’re an employee, retiree or donor member of any of the organizations associated with the credit union.

High Rate: Dow Chemical Employees’ Credit Union – 2.25% APY, $500 minimum deposit

Members of Dow Chemical Employees’ Credit Union have multiple options if they’re interested in opening a CD. Simple and bump rate CDs are available in addition to youth CDs for children under the age of 18. Account holders with standard CDs can qualify for a member saver reward handed out annually.

As its name suggests, the Dow Chemical Employees’ Credit Union, which was founded in 1937, was originally created by and for employees of the Dow Chemical Company. Membership today is open to anyone who qualifies through a family member, or association with a group like the Midland Center for the Arts.

1-year CD yields offered by popular banks – December 2019

Best for No Minimum Deposit: Capital One Bank – 2.10% APY

Capital One has both a brick-and-mortar presence and is an online bank. It offers competitive yields across nine CD terms. Capital One CDs and its 360 Performance Savings account don’t have minimum balance requirements. Its savings account earns the competitive APY on all balances.

The bank is best for consumers interested in opening an account with a full-service online bank, some physical branches and a wide network of fee-free ATMs. Capital One is based in McLean, Virginia. The bank earned 4.5 out of five stars in Bankrate’s full review of its products and offerings.

Best for Competitive Yield: Comenity Direct – 2.10% APY, $1,500 minimum deposit

Among popular online banks, Comenity Direct offers one of the most competitive yields. And savers don’t have to pony up too much cash to qualify. The minimum deposit for its savings account is even lower ($100). CD terms range from one year to five years. As in most cases, at Comenity Direct, the longer-term CDs pay higher APYs.

Comenity Direct launched in April 2019. It’s an online-only bank that offers high-yield savings products and CDs. It’s a division of Comenity Capital Bank, which is part of a brand that has been around for 30 years.

Best for Flexible Interest Payment Options: Citizens Access – 2.10% APY, $5,000 minimum deposit

Citizens Access launched in July 2018. It made its debut with a savings account and CDs. And then in November 2019, it added an 11-month liquid CD and stopped offering the six and 18-month CDs.

The bank offers a competitive yield on its CDs and savings account. All of its products require a $5,000 minimum deposit. Interest payment options are flexible, meaning customers can have interest credited to the principal balance of the CD or transferred to another account, without penalty, before the CD matures.

Citizens Access is a direct bank offering savings products and the new online division of Citizens Bank. It earned 3.5 out of 5 stars in Bankrate’s full review of its products and offerings.

Best for Competitive Yield for Super Savers: PurePoint Financial – 2.05% APY, $10,000 minimum deposit

PurePoint Financial is a division of MUFG Union Bank. It offers nine regular CD terms and three terms for its no-penalty CDs. It also offers an online savings account with a competitive yield.

All of PurePoint Financial’s products have one thing in common: they require a $10,000 minimum deposit to open. So these accounts aren’t a good fit if you’re not ready to deposit that much. In Bankrate’s full review of the bank’s products and offerings, PurePoint Financial earned 3.4 out of 5 stars.

Best for No Minimum Balance Requirement: Barclays Bank – 2.00% APY

Barclays Bank doesn’t have minimum balance requirements to open its CDs and savings account. That means it’s an option for savers across all income levels. The bank offers nine CD terms. It has competitive yields, but it doesn’t tend to offer the highest available APY. Barclays also offers a savings account, which has a competitive APY.

The bank is headquartered in the U.K. and has a global presence. In the U.S., its products are limited, but the bank overall rates well for its lack of monthly fees and deposit products. Barclays Bank earned 4.1 out of five stars in Bankrate’s full review of its products and offerings.

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.

Just keep in mind that the yields associated with no-penalty CDs tend to be lower than the rates tied to traditional CDs.

1-year CD FAQs

What is a 1-year CD?

Having a 1-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 (unless you don’t mind getting hit with 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 1-year CD are more attractive than the yield associated with a liquid savings account, then it’s a good time to consider getting a 1-year CD. And if you’re constantly dipping into your savings, a 1-year CD could help you save more money.

Today’s top nationally available 1-year CDs pay 0.74 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 mortgage) 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 rate 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 annual percentage yield (APY). This tells you how much interest you’ll earn within a year, depending on how frequently interest compounds. Calculate how much interest you’ll earn as you compare rates.

Right now, average CD rates remain at historic lows. However, if you shop around, you can find better deals than what’s offered by the primary bank managing your checking account. Researching rates at several local banks, as well as reputable online banks, will usually yield the best rate.

Can you lose money with a 1-year CD?

As long as you choose a 1-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-insured bank is insured to at least $250,000 per FDIC-insured bank. According to FDIC.gov, no depositor has lost a single cent on FDIC-insured funds as a result of a bank failure. If you’re concerned about your FDIC insurance eligibility, you can use the FDIC’s Electronic Deposit Insurance Estimator.

The standard share insurance amount is $250,000 per share owner, per insured credit union, for each ownership category at NCUA institutions.

It’s also important to factor in inflation. 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 1-year CD, it’s important to find out how it stacks up against other types of investment vehicles. Read on to find out how 1-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 1-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.

Note that there are downsides to choosing a 1-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.

[COMPARE: Best online savings accounts]

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, 1-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 many banks, you’ll have access to a debit card.

1-year CD vs. a 5-year CD

While a 5-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 4-year or 5-year CD doesn’t make sense for many people.

“The current yields are barely ahead of what inflation is likely to be over the next five years,” McBride says. “So, there’s no guarantee of preserving your buying power, much less growing it by tying your money up for that long a period of time at this point.”

Carefully weigh the pros and cons, and consider using a CD laddering strategy to take advantage of different CD term lengths.

Bankrate’s best 1-year CD rates, December 2019

  • America’s Credit Union: 2.38% APY
  • Quontic Bank: 2.25% APY
  • TAB Bank: 2.25% APY
  • CommunityWide Federal Credit Union: 2.25% APY
  • Dow Chemical Employees’ Credit Union: 2.25% APY

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, 1-year CD. Or you may find that you’re better off opting for an account with a longer term.

Learn more about CDs:

— Bankrate’s Matthew Goldberg also contributed to the update of this story.