Best 1-Year CD Rates for July 2023

Certificates of deposit are a special type of savings account that have boosted interest rates in exchange for keeping your funds locked up for a fixed amount of time. The reason banks and credit unions are willing to pay higher rates on CDs is because they can generally count on those funds staying in the account, unlike funds that can unpredictably come and go in a savings, money market, or checking account.

Banks and credit unions offer CDs in a variety of terms, from 1 month up to 10 years, so you can choose how long you're willing to lock up your funds. The most common CD terms, however, range from 6 months to 5 years, with 1-year certificates being the most widely available of all.

The date your CD ends is called its maturity date, and although it’s not impossible to withdraw your funds before maturity, you’ll incur a financial penalty if you do so.

Certificates of deposit are a special type of savings account that have boosted interest rates in exchange for keeping your funds locked up for a fixed amount of time. The reason banks and credit unions are willing to pay higher rates on CDs is because they can generally count on those funds staying in the account, unlike funds that can unpredictably come and go in a savings, money market, or checking account.

Banks and credit unions offer CDs in a variety of terms, from 1 month up to 10 years, so you can choose how long you're willing to lock up your funds. The most common CD terms, however, range from 6 months to 5 years, with 1-year certificates being the most widely available of all.

The date your CD ends is called its maturity date, and although it’s not impossible to withdraw your funds before maturity, you’ll incur a financial penalty if you do so.

The rates banks and credit unions choose to pay on CDs varies widely, with the top rates in the country typically sitting three to five times higher than the national average, and sometimes even more. So the CD shopper who does their homework stands to earn considerably more interest than if they limit themselves to a CD from their existing bank.

In fact, some of the biggest banks pay among the worst rates. In contrast, smaller brick-and-mortar banks, online-only banks, and credit unions tend to offer substantially higher returns. Shopping from our daily rankings of the best CD rates is an easy way to ensure you’re scoring a top nationwide rate.

If you’ve never held an account at a different institution than where you have your primary checking account, you may be concerned about bank safety. But that’s easy to lay to rest. Any bank that is FDIC-insured, or credit union that is NCUA-insured, carries the same coverage on $250,000 in deposits, per individual and per institution. So if you see that an institution is an FDIC or NCUA member, your protection is the same, whether the institution is big or small, physical or online-only.

You may also wonder about the inconvenience of having your funds at more than one bank. With CDs, however, this is essentially a non-factor, since you won’t be regularly interacting with your CD account. Even with a savings or money market account, internet transfers between institutions are easy these days. But you won’t be making transfers to or from your CD account until you cash out.

Early withdrawal penalties, or EWPs, differ greatly among banks and credit unions. For a one-year term, the most common EWP is three or six months' worth of interest. What that means is, if you cash in your CD before its maturity date, the funds returned to you will be docked by the amount of interest the CD would have earned in three or six months.

But don't assume all EWPs are similar, or even reasonable. You may find one that charges a whole year's worth of interest, while another assesses a mild 30 days' interest. Still others have more complicated or onerous policies that can even eat into your principal. That's why due diligence is critical before funding any CD. You want to be sure you understand what you're signing up for. And when two choices are relatively equal, choose the CD with the milder penalty.

Opening a CD is generally no more difficult than opening a savings or checking account. You'll have to provide personal information and be able to identify yourself, but almost all of the certificates in our rankings of the top nationally available CD rates can be opened online within 10 or 15 minutes.

You’ll also need to specify how you’ll fund the new CD. The most common approach is with an electronic transfer from another financial institution. But options to send a check or wire money may be available, depending on the bank or credit union where you’re opening the CD. Note that if you are funding the new certificate with a very large deposit, you’ll want to check with the institution on any external transfer limits that could be an obstacle. 

After opening the certificate, you'll be provided with the written terms of your agreement, which will stipulate the interest rate you'll be paid, the date of the CD's maturity, the frequency with which your interest will be paid and compounded, and the specific penalty calculation that will be used if you request to withdraw your funds before maturity.

After that, CDs are ideally a "set it and forget it" product. You'll receive monthly or quarterly statements showing your certificate's growth, but hopefully you can leave the funds untouched until the maturity date rolls around.

Although the bank or credit union will notify you in advance of the CD maturing, it's wise to set your own calendar reminder sometime well ahead of that, so you can be ready with a decision on what to do with the funds when the CD expires.