Choosing a one-year certificate of deposit (CD) these days can be a smart choice, since competitive ones may earn even higher rates than high-yield savings accounts. A one-year CD doesn’t lock up your money for too long, so it’ll be available again soon for planned purchases or other investments.

Not all CDs are created equal, however, since their annual percentage yields (APYs) can vary widely. An investment of $100,000 in a one-year CD earns significant interest — if you choose the right CD. Here’s how much interest you could earn right now on $100,000 in CDs earning the national average rate, a competitive rate and the near-zero rate commonly offered by big brick-and-mortar banks.

Type of 1-year CD Typical APY Interest on $100,000 after 1 year Total value of CD with $100,000 opening deposit after 1 year
CDs that pay competitive rates 5.30% $5,300 $105,300
CDs that pay the national average 1.59% $1,590 $101,590
CDs from big brick-and-mortar banks 0.03% $30 $100,030

You’ll often find competitive APYs at online banks, such as Ally Bank and Bask Bank.

National average 1-year CD rates

The national average APY for one-year CDs is currently 1.59 percent, and overall this has either increased or stayed since March 2022. While this is significantly higher than CDs that earn rock-bottom yields, competitive CDs earn more than double this average.

Investing $100,000 in a one-year CD that earns a 1.59 percent APY would provide you with around $1,590 in interest when the CD matures — for a total balance of $101,590, as shown below:

Type of account: 1-year CD
Opening deposit: $100,000
APY: 1.59%
Total interest after 1 year: around $1,590
Total value of CD after 1 year: around $101,590

An online CD calculator is a quick way to determine the amount of interest you’ll have earned on a CD when its term is up.

Competitive 1-year CD rates

Shopping around for a bank with the best rates can make a significant difference in the total value of a CD when it matures. When you’re investing a large amount of money in a CD, a high yield can earn you thousands of dollars more than a low one.

If you were to deposit $100,000 into a one-year CD that pays a competitive APY of 5.3 percent, you’d have around $5,300 in interest when the term is up, for a total balance of $105,300.

Type of account: 1-year CD
Opening deposit: $100,000
APY: 5.3%
Total interest after 1 year: around $5,300
Total value of CD after 1 year: around $105,300

For perspective, earning this competitive rate would give you around $3,550 more in total interest than earning just the national average rate.

1-year CD rates from big banks

Large banks with lots of branches tend to offer rock-bottom APYs on CDs and other deposit products. For instance, a standard one-year CD at U.S. Bank earns 0.05 percent, while one at Bank of America earns 0.03 percent and one at Chase Bank earns 0.01 percent.

If you were to deposit $100,000 in a one-year CD that pays a yield of 0.03 percent, it would have earned only around $30 upon maturity — for a total balance of $100,030.

Type of account: 1-year CD
Opening deposit: $100,000
APY: 0.03%
Total interest after 1 year: around $30
Total value of CD after 1 year: around $100,030

In all, $100,000 in a competitive one-year CD could earn you around $5,270 more in interest than the same amount in a CD that pays a very low yield.

Finding a 1-year CD with the best rate

It pays to shop around for the best one-year CD rates. The most competitive yields can often be found at online banks, which don’t have to bear the overhead expenses of running branches. Credit unions may offer favorable rates as well.

If you’re investing $100,000 or more in a CD, look into jumbo CDs, which may pay higher rates than standard CDs. Some banks offer a tiered APY structure that rewards higher balances with better rates.

If you’re considering CDs with terms of other lengths, check to see if a bank’s longer-term CDs truly pay higher yields than its shorter-term ones. Currently, various one-year CDs are out-earning some four-year CDs and five-year CDs.

Are 1-year CDs safe?

Most CDs earn a fixed APY, which some savers find particularly valuable in a falling rate environment when the yields of variable-rate deposit products are likely to decrease over time. Thanks to a CD’s guaranteed rate, you won’t lose interest or principal as long as you don’t cash it in before it matures and incur an early withdrawal penalty.

As long as you’re with a federally insured financial institution, your money in a CD is safe up to $250,000 per depositor, per insured institution, per ownership category. This guarantees you won’t lose your money in the event of a bank failure.

The Federal Deposit Insurance Corp. (FDIC) is the agency that insures deposits at member banks, while the National Credit Union Administration (NCUA) insures deposits at member credit unions.

Bottom line

The benefits of a CD include a guaranteed rate and no loss of principal or interest if you don’t cash it in before the term ends. When investing a large sum of money in a CD, don’t forget to shop around for a high APY, since you can lose out on thousands of dollars in interest by going with a lackluster rate over a competitive one.