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 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 November 2019
|Financial Institution||APY||Minimum Deposit|
|First National Bank of America||2.35%||$1,000|
|Sallie Mae Bank||2.10%||$2,500|
|CommunityWide Federal Credit Union||2.30%||$1,000|
|Live Oak Bank||2.30%||$2,500|
|Capital One Bank||2.10%||$0|
“(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 November 2019
Best Overall: First National Bank of America – 2.35% APY, $1,000 minimum deposit
First National Bank of America has a handful of products for savers, including access to a health savings account and a checking account. CDs are available across most of the standard terms. Plus, there are long-term 6-year and 7-year CDs. Its 12-month CD is a great option for new savers and those looking to set aside a little money for a whole year.
The institution is a community bank based in Michigan with three physical branches. It opened in 1955 as First National Bank of East Lansing. The company transitioned to First National Bank of Michigan in 1978 before ultimately becoming First National Bank of America in 1988. Check out the full review of its products and offerings.
Runner-up: Sallie Mae Bank – 2.10% APY, $2,500 minimum deposit
Sallie Mae is best known for the private loans it offers students across the country. It also provides consumer banking products and services, including CDs with standard terms ranging from six months to five years. Additionally, there are special CD terms not commonly found at most banks, like the 11-month, 13-month, 15-month and 30-month CDs being offered. There are no monthly fees, and only a possible returned deposit fee that applies in few circumstances.
Early withdrawal penalties at the bank are fairly standard. For CDs maturing in 12 months or less, the consequence for an early exit is 90 days worth of simple interest.
Best Credit Union Rate: CommunityWide Federal Credit Union – 2.30% 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: Live Oak Bank – 2.30% APY, $2,500 minimum deposit
Live Oak Bank is an online bank continuing to offer competitive yields as CD rates continue to fall following another interest rate cut by the Federal Reserve in October. Though the minimum deposit may be slight steep for new savers without much money to lock up, it’s still accessible to others looking for a safe place to park their short-term funds.
In addition to CDs, the bank offers a high-yield savings account with no monthly maintenance fees and interest that compounds daily. Established in 2008, Live Oak Bank is a federally-insured financial institution. Supporting small business owners is part of its mission statement. It earned five out of five stars in the latest review of its financial health.
High Rate: BrioDirect – 2.25% APY, $500 minimum deposit
BrioDirect is the online banking division of Sterling National Bank, an institution that has served business and personal banking customers for over a century. Accounts at BrioDirect, like its 12-month CD can be opened in minutes, giving customers quick access to attractive rates and products that can be opened with a low minimum deposit. The bank’s savings account requires a deposit of just $25.
The 12-month CD yield is the highest interest rate currently offered by the bank. It’s the best option among the institutions various products for savers looking to earn extra interest in a declining rate environment.
Best 1-year CD rates offered by some of the most popular online banks:
- Comenity Direct: 2.25% APY, $1,500 minimum deposit
- Capital One Bank: 2.10% APY, no minimum deposit
- Barclays Bank: 2.15% APY, no minimum deposit
- Synchrony Bank: 2.00% APY, $2,000 minimum deposit
- Citizens Access: 2.10% APY, $5,000 minimum deposit
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.
Here are some banks offering no-penalty CDs:
- Marcus by Goldman Sachs: 7-13 months; 1.9% – 1.65% APY; $500 minimum deposit
- Ally Bank: 11 months; 1.65% – 1.90% APY; $0 – $25,000 deposit to earn APY
- CIT Bank: 11 months; 1.80% APY; $1,000 minimum deposit
- PurePoint Financial: 11-14 months; 1.65% – 1.90% APY; $10,000 minimum deposit
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 0.78 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 November 2019
- First National Bank of America: 2.35% APY
- Sallie Mae Bank: 2.10% APY
- CommunityWide Federal Credit Union: 2.30% APY
- Live Oak Bank: 2.30% APY
- BrioDirect: 2.25% APY
- Comenity Direct: 2.25% APY
- Capital One Bank: 2.10% APY
- Barclays Bank: 2.15% APY
- Synchrony Bank: 2.00% APY
- Citizens Access: 2.10% 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.