Are you looking to invest in a risk free 1 year CD? 2023 is a great time to invest in CDs again. Rates were on the rise in 2018 when the Fed finally raised rates. Then, they came down in 2019 and 2020 due to Fed rate cuts and COVID19. And rates rose again in 2022 and 2023.
With so many changes in the financial markets, many banks are still offering quite low interest rates. But there are some golden eggs out there in comparison. Lets examine which bank has the best 1 year CD rates today.
What Exactly Is A CD Again?
Before diving into our analysis of which bank has the best 1 year CD rates, here's a quick recap on CDs in case you're unfamiliar with them or need a refresher.
A certificate of deposit, most commonly referred to as a CD, is a stable savings product offered by banks that pays interest for a specific time period. Customers apply for a CD in a few easy steps. Deposit cash into a CD account and the bank will accrue and make interest payments into the account based on a fixed rate for the duration of the CD.
CDs are a simple, risk free way to invest and park cash for set periods of time. They typically offer higher interest rates than checking and money market accounts because of the “lock up” period.
Even though CDs have a set term or time frame when the bank holds your cash, you can still withdraw your cash early if needed. But if you withdraw more than the earned interest before the CD's maturity date, you'll get dinged with penalty charges.
The Award For The Highest 1 Year CD Rates Goes To…
My favorite bank for the highest 1 year CD Rates is CIT Bank. Their rates are often well above the competition. For example, I've seen their rates range anywhere from 0.5% higher to over 3.5% higher than major banks.
Here are some of CIT Bank's CD features:
- Earn well above the national average
- No hidden fees
- Daily compounding interest to maximize your earning potential
- FDIC insured
Runners Up For The Best 1 Year CD Rates
Rates can vary significantly from one bank to the next. Ally Bank and CapitalOne360 are usually the closest runners up to CIT BANK. And Comenity Direct and TIAA Bank are even lower down the rankings. Occasionally, giants like Citibank and Chase can be competitive, but typically their rates are notably lower.
Keep in mind that CD rates can change weekly or even daily. So if you see a good looking rate it's good to take advantage of the opportunity as it could literally drop the next day.
Citibank is my main bank for day to day checking, easy access when I travel abroad, and investing in structured notes. But unfortunately banks like Citi, Wells Fargo, Bank of America, and Chase typically don't offer very competitive CD rates. When I'm looking to invest in CDs, I always go straight to CIT Bank.
CIT Bank has historically been a consistent industry leader followed by CapitalOne360 and Ally Bank. Solely online based banks have a major advantage at offering the highest CD interest rates due to lower operating costs. They can pass their savings to you with higher rates. But it's always good to shop around since rates and competition change all the time.
It’s Easy To Open A 1 Year CD
Online banking has made opening CDs easier than ever. You can get up and running with a CD account in three easy steps. Here’s all you have to do.
- Input Your Info. Simply provide your address, phone, email and social security number (or other taxpayer ID).
- Fund Your Account. Deposit your funds into your new CD account by electronic transfer, mail in check, or wire. The minimum deposit required, which isn't always required, varies by bank.
- Sit Back And Relax! Yep, that’s it! You’ll receive an email confirmation once your account is activated.
Yep, it’s that simple!
I recommend downloading the free mobile app for the bank you choose to purchase your CD with. Then you can easily access your account on the go. Here are some of the main free benefits and features of banking mobile apps.
- Access account balances and transaction history
- Transfer money between accounts
- Deposit checks for High Yield Savings customers
Open A 1 Year CD Today
A 1 year CD is an easy, safe, risk free way to invest in an FDIC-insured account with a competitive interest rate when you don't anticipate needing access to your cash for one year. It’s a great choice for a short term savings goal.
Alternatively, you can open up a high yield money market account so you have maximum flexibility.
Also Consider No Penalty 11-Month CDs or 13-Month CDs
In addition, be on the lookout for special promotional rates on no-penalty 11-month CDs and 13-month CDs. Some great benefits of no-penalty CDs is that you can withdraw all of the money before maturity if needed without any penalties or fees.
It’s also very easy to set up a secure account online without ever needing to step into a branch. You can access your account info 24/7. And their customer service team is conveniently available to help with questions six days a week.
About the Author: Sam began investing his own money ever since he opened an online brokerage account in 1995. Sam loved investing so much that he decided to make a career out of investing by spending the next 13 years after college working at two of the leading financial service firms in the world.
During this time, Sam received his MBA from UC Berkeley with a focus on finance and real estate. He also became Series 7 and Series 63 registered. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate six-figures a year in passive income. He spends time playing tennis, hanging out with family, and writing online to help others achieve financial freedom.
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