If you’re comparing CD interest rates today, some of the most competitive options still look very attractive. Some offer annual interest rates of 5% or more, sure to beat inflation. Plus, one-year CDs don’t lock up your funds for long, making them quickly available again for planned purchases or other investments.
However, not all CDs are created equal. Annual Percentage Yields (APYs) vary widely. If you put $100,000 into a one-year CD today, Many If you choose the right CD, you can earn $100,000 in interest after 12 months: Here’s how much interest you could earn today if you put $100,000 in a CD based on national average interest rates, competitive interest rates, and near-zero interest rates typically offered by major banks.
| 1 year CD type | Typical APY | $100,000 in interest after one year | Total value of CDs after one year for an initial deposit of $100,000 |
|---|---|---|---|
| CDs that pay competitive rates | 5.00% | $5,000 | $105,000 |
| CDs that pay the national average | 1.80% | $1,800 | $101,800 |
| CDs from major brick-and-mortar banks | 0.03% | $30 | $100,030 |
You can often find competitive APYs at online banks like Ally Bank and Bask Bank, plus some local credit unions and community banks may offer above-average APYs.
National average 1-year CD interest rate
The national average APY for a one-year CD is currently 1.80 percent. However, this average could fall soon if the Federal Reserve cuts interest rates in September, which seems likely. While 1.80 percent is significantly higher than the lowest-yielding CDs, competitive CDs can offer yields more than double this average.
If you invest $100,000 in a one-year CD with an annual interest rate of 1.80 percent, you will earn approximately $1,800 in interest when the CD matures, leaving you with a total balance of $101,800, as shown below.
Account type: 1 year CDOpening Deposit: $100,000Annual interest rate: 1.80%Total interest after one year: Approximately $1,800Total value of CDs after one year: Approximately $101,800
You can use an online CD calculator to quickly calculate the amount of interest you’ll earn when your CD matures.
Competitive 1-year CD interest rates
Shopping around for the bank with the best interest rate can make a big difference in the total value of your CDs at maturity, and if you’re putting a large amount of money into a CD, a higher yield could earn you thousands more than one with a lower yield.
If you put $100,000 into a one-year CD with a competitive 5 percent annual interest rate, you’ll earn about $5,000 in interest at the end of the term, for a total balance of $105,000.
Account type: 1 year CDOpening Deposit: $100,000Annual interest rate: 5.00%Total interest after one year: Approximately $5,000Total value of CDs after one year: Approximately $105,000
By the way, getting this competitive interest rate can earn you over $3,200 in additional interest over just getting the national average interest rate.
1-year CD interest rates from major banks
Large banks with lots of branches tend to offer very low APYs on CDs and other savings products. For example, a standard one-year CD from US Bank offers 0.05%, while Bank of America offers 0.03% and Chase Bank offers 0.01%. These yields won’t get you rich; in fact, if inflation falls below 3%, your money’s purchasing power will decrease.
If you put $100,000 into a one-year CD that yields 0.03 percent, you’d only get around $30 at maturity, for a total balance of $100,030.
Account type: 1 year CDOpening Deposit: $100,000Annual interest rate: 0.03%Total interest after one year: About $30Total value of CDs after one year: Approximately $100,030
Overall, if you put $100,000 in a competitive one-year CD, you could earn nearly $5,000 more in interest than the same amount you put in a very low-yield CD.
Find the best 1-year CD interest rate
It pays to shop around for the best interest rate on a one-year CD. The most competitive rates are often found with online banks, which don’t have to bear the overhead of running a branch. Credit unions may also offer competitive rates.
If you have more than $100,000 to invest in a CD, consider a jumbo CD, which can offer a higher interest rate than a standard CD. Some banks also offer a tiered APY structure, where the higher your balance, the higher your interest rate.
If you’re considering CDs with other terms, make sure the bank’s long-term CDs truly pay a higher yield than shorter-term CDs. Currently, various one-year CDs are paying higher yields than some four- and five-year CDs.
Are 1-year CDs safe?
Most CDs earn a fixed APY, which some savers find especially valuable in a falling interest rate environment where yields on variable rate savings products can fall over time. Thanks to a CD’s guaranteed interest rate, you won’t lose any interest or principal unless you cash it out before maturity and incur an early withdrawal penalty.
As long as you deposit it with a federally insured institution, the money in the CD is safe up to $250,000 per depositor, per insurer, per ownership segment, so you won’t lose your money if the bank goes bankrupt.
The Federal Deposit Insurance Corporation (FDIC) is the agency that insures the deposits of member banks, and the National Credit Union Administration (NCUA) insures the deposits of member credit unions.
Conclusion
Although all one-year CDs have the same term, not all offer the same yield potential, and if you’re thinking about putting away a large sum of money, like $100,000, you’ll want to spend extra time comparing a wide range of options.
Cast your net wider, including lesser-known banks and credit unions that may not even have branches, than the big brick-and-mortar banks. As long as the full amount of your deposit is FDIC-insured or NCUA-insured, you can make more money without worrying about the possibility of losing it.
–Freelance writer David McMillin Contributed to updating this article.
