The 1-year CD — also called a 12-month certificate of deposit — is the workhorse of the CD world. It offers enough time for a bank to price a meaningfully higher rate than a savings account, while keeping your money accessible again in a predictable, near-term window. For savers who are cautious about tying up cash for several years, or who simply want to revisit their options annually, the 12-month term often hits the right balance between yield and flexibility.

As of Jun 27, 2026, our live rate feed shows Bask Bank offering 4.40% APY on a 12-month CD with a $1,000 minimum deposit. Other institutions in the feed — such as Suncoast Credit Union at 4.50% APY and FastBreak by LoanMart at 5.00% APY — list terms that may include 12-month options (confirm term availability directly). These are illustrative snapshots; rates change frequently and must be verified with the institution before you open an account.

What drives 1-year CD rates?

CD rates are largely influenced by the federal funds rate — the overnight lending rate set by the Federal Reserve. When the Fed raises rates, banks and credit unions tend to increase deposit yields to attract funding. When the Fed cuts rates, CD yields typically follow, though with a lag. Short-term CD rates (3 months to 1 year) are especially sensitive to near-term Fed policy expectations, while longer-term rates (3–5 years) reflect where the market thinks rates will settle over time.

Competition also matters enormously. Online banks and credit unions, which carry lower overhead than traditional branch networks, have consistently posted some of the highest CD rates available. National brick-and-mortar banks often pay less, relying on brand familiarity rather than rate competition to attract deposits. That is why searching beyond your local branch — including using a rate comparison tool — can meaningfully increase your return.

Normal yield curve vs. inverted yield curve: why the 1-year might beat the 5-year

In a normal interest-rate environment, longer-term CDs pay higher rates than shorter ones — you are rewarded for locking your money away longer. But yield curves sometimes invert, meaning shorter-term instruments yield more than longer ones. This happens when markets expect rates to fall in the future. An inverted curve is one reason why a 1-year CD can sometimes offer a higher APY than a 3- or 5-year CD from the same institution.

Always compare rates across multiple terms at the same institution — the 1-year rate is sometimes higher than the 3-year rate when markets expect future rate cuts.

How 1-year CD rates compare to high-yield savings accounts

A high-yield savings account and a 1-year CD may show similar APYs on any given day, but they behave very differently over time. The savings account rate is variable — it can rise or fall at any point. The CD rate is fixed for the full 12 months. If you open a 12-month CD at 4.40% APY today and savings rates drop to 3.50% in four months, your CD keeps earning 4.40%. Conversely, if savings rates rise to 5.50%, your CD is still locked at 4.40%.

The decision usually comes down to your view on rate direction and your liquidity needs. If you expect rates to fall, locking in a 1-year CD secures today's yield. If you expect rates to rise, or if you might need the funds before the year is up, a high-yield savings account gives you flexibility without an early-withdrawal penalty.

Early-withdrawal penalties on 12-month CDs

Most banks and credit unions charge an early-withdrawal penalty if you access your funds before the CD matures. For 12-month CDs, this penalty is commonly 90 to 180 days of interest. On a $10,000 CD earning 4.40% APY, a 180-day penalty would cost roughly $220 — meaningful, but not catastrophic. Still, if there is any chance you will need the money within the year, factor this into your decision or explore no-penalty CD options instead.

  • Ask the institution for its exact early-withdrawal penalty policy before you open a CD — it is disclosed in the Truth in Savings document.
  • Compare the penalty against the extra yield you would earn versus a savings account to see if the CD is still worthwhile even in a worst-case early-withdrawal scenario.
  • Some no-penalty CDs waive fees entirely after a short initial lock-up period — a useful option if flexibility matters to you.

Credit unions vs. banks: where are the best 1-year CD rates?

Credit unions are member-owned, not-for-profit cooperatives, which often allows them to return surplus income to members in the form of higher deposit rates and lower loan rates. Several of the top-yielding offers in today's rate feed come from credit unions: PenAir Credit Union, California Coast Credit Union, Suncoast Credit Union, and Genisys Credit Union. Many credit unions have broad membership eligibility — sometimes anyone in a specific state or who joins an affiliated organization can qualify. Check eligibility before assuming a credit union's rates are out of reach.

Credit union deposits are insured by the NCUA (National Credit Union Administration), which provides coverage equivalent to FDIC insurance: up to $250,000 per member, per credit union, per ownership category. Bank CDs carry FDIC coverage under the same dollar limits. Both forms of federal insurance are provided by the issuing institution's membership in the relevant agency — not by any rate comparison platform.

How to shop for the best 1-year CD rate

  1. Decide on your minimum deposit. Some top-rate CDs require $500, $1,000, or more. Filter out options you don't qualify for.
  2. Compare APYs, not stated rates. APY already incorporates compounding and is the legally standardized figure for comparison.
  3. Read the early-withdrawal penalty terms before you commit — they are in the Truth in Savings disclosure.
  4. Check membership eligibility if a credit union catches your eye. Many have broader eligibility than their name implies.
  5. Confirm the rate directly with the institution the day you plan to open the account. Advertised rates can change overnight.
  6. Verify FDIC or NCUA membership to ensure your deposit is federally insured.

Using a 1-year CD as part of a CD ladder

One of the most practical uses of a 1-year CD is as a rung in a CD ladder. A CD ladder is a strategy where you divide your savings across multiple CDs with staggered maturities — for example, one each at 6 months, 1 year, 2 years, and 3 years. As each CD matures, you reinvest the proceeds into a new longer-term CD (or use the cash if needed). This approach gives you regular access to funds while keeping most of your savings earning competitive long-term rates. Our full guide to CD laddering is at /secure-returns/learn/cd-ladder-explained/.

A CD ladder turns the rigid lock-up of individual CDs into a rolling, flexible savings strategy — some funds are always maturing while the rest earn higher long-term yields.

This article is general financial education, not personalized advice. Individual circumstances — tax situation, income, existing savings — vary. For significant financial decisions, consult a qualified financial professional.

See today's full lineup of 1-year and short-term CD rates across banks and credit unions at /preview/secure-returns/compare/. Filter by term and minimum deposit to find offers that fit your situation, then confirm the rate directly with the institution before opening an account.