The best 1-year CD rates for July 2021

	APY	Opening deposit
Ally Bank	0.55%	$0	Ally Ally High Yield Certificate of Deposit
Marcus by Goldman Sachs	0.55%	$500	Marcus by Goldman Sachs Marcus by Goldman Sachs High-Yield CD
Synchrony High-Yield Savings	0.50%	$0	Synchrony Synchrony CD
First Internet Bank	0.60%	$1,000	First Internet Bank of Indiana First Internet Bank of Indiana Certificate of Deposit
Discover Online Savings Account	0.50%	$2,500	Discover Discover CD
Comenity Direct	0.70%	$1,500	Comenity Direct Comenity Direct Certificate of Deposit
First National Bank of America	0.60%	$1,000	First National Bank of America First National Bank of America Certificate of Deposit

As of July 2021, the average rate for a 1-year CD in the US is 0.14%, according to the FDIC.

If you want to grow your money but keep it safe from the turbulence of the stock market, a certificate of deposit (CD) may be a good option.

Right now, the best 1-year CD rates are at least 0.50%. You can snag a higher APY with longer CD terms, but 1-year CDs have their perks.

You can renew a 1-year CD for a higher APY if rates are up in a year, whereas you could miss out on higher rates if you lock in an APY for longer with a 3-year or 5-year term. A 1-year CD is also a worthwhile option if you think you'll need to access your funds in a year.

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Learn more about our top picks

Ally High Yield CD

Why it stands out: Ally is one of the few banks that doesn't require a certain amount to open a CD, so you can save regardless of how much money you have. Ally also charges some of the lowest early withdrawal penalties you can find.

1-year CD early withdrawal penalty: 60 days interest

What to look out for: Other types of CDs. Ally also offers an 11-month No Penalty CD, and a 2-year and 4-year Raise Your Rate CD that allows you to increase your APY if Ally's rates also go up during the term. You may want to consider whether either of these options appeal to you more than an Ally High Yield CD.

Marcus High-Yield CD

Why it stands out: Marcus pays one of the highest rates in the industry, and its mandatory $500 deposit is lower than what many banks require.

1-year CD early withdrawal penalty: 270 days interest

What to look out for: Early withdrawal penalty. Its 270 days interest penalty is higher than many competitors' fees for a 1-year CD. If you're worried about needing to withdraw early, you may be interested in using another bank or opening a Marcus No-Penalty CD. Or, you may want to look at high-yield savings accounts, which allow you to withdraw at any time.

Synchrony Bank CD

Why it stands out: Synchrony pays competitive rates. If you're not positive you want a 1-year CD, then Synchrony has plenty of other term lengths to choose from.

1-year CD early withdrawal penalty: 90 days simple interest

What to look out for: Although Synchrony has a variety of term lengths overall, you can find ones longer than 5 years elsewhere.

First Internet Bank of Indiana Certificate of Deposit

Why it stands out: First Internet Bank of Indiana pays a good rate for 1-year CDs, and contrary to what the bank's name may lead you to believe, this online bank is available to residents of all US states.

1-year CD early withdrawal penalty: 180 days interest

What to look out for: Monthly compounded interest. First Internet Bank of Indiana compounds your interest monthly, not daily, so you'll earn less in the long run. Depending on how much money is in your CD, this may or may not make a significant difference.

Discover CD

Why it stands out: Discover's rates are competitive, and if you decide you want a longer-term CD, then it has terms up to 10 years.

1-year CD early withdrawal penalty: 6 months

What to look out for: Minimum deposit and early withdrawal penalty. You'll need at least $2,500 to open a CD with Discover, and you can find lower early withdrawal penalties elsewhere.

Comenity Direct CD

Why it stands out: Comenity Direct pays competitive rates.

1-year CD early withdrawal penalty: 180 days simple interest

What to look out for: Minimum deposit and early withdrawal penalty. You'll need at least $1,500 to open a CD, and you can find lower early withdrawal penalties with some of our other top picks.

First National Bank of America CD

Why it stands out: First National Bank of America's main strength is its high APYs.

1-year CD early withdrawal penalty: 180 days interest

What to look out for: Early withdrawal penalty. The 180-day penalty isn't as harsh as what some banks charge, but you can still find lower fees at some of our other top picks.

Other 1-year CDs we considered

We looked at the following 1-year CDs as well, but all of them currently have lower rates than our winners:

American Express CDs
Capital One 360 CDs
Pentagon Federal Credit Union Money Market Certificate
CIT Bank CD
RisingBank CD
Amerant CD
BrioDirect High-Yield CD
CFG Bank CD
TIAA Basic CD
Connexus Share Certificate
Bank5 Connect High-Yield CD
Sallie Mae CD
NBKC CD
Live Oak Bank CD

Frequently asked questions

Why trust our recommendations?

Personal Finance Insider's mission is to help smart people make the best decisions with their money. We understand that "best" is often subjective, so in addition to highlighting the clear benefits of a financial product or account – a high APY, for example – we outline the limitations, too. We spent hours comparing and contrasting the features and fine print of various products so you don't have to.

What is a CD?

A CD, or certificate of deposit, is a time-sensitive savings account that usually holds your money at a fixed interest rate for a specified period of time. If you don't need immediate access to your savings, a CD can guarantee a return on your money since you lock in a fixed APY for the term of the CD.

With most banks, you typically won't be able to deposit more money or access your funds before the CD matures without paying a penalty.

You will, however, earn interest on the amount and have the option to collect those payments monthly or reinvest them into your CD. Most banks offer varying rates for different terms and deposit amounts – in many cases, the longer the term, the higher the rate.

At the CD's maturity date, you'll typically have a 10- to 14-day grace period in which you can withdraw your money and close the account or renew the term.

What is a 1-year CD?

With a 1-year CD, you stash away your money for 12 months and typically earn a fixed rate. You have the option to renew your CD at the end of the year, or close the account and pocket the money.

How do CD rates work?

Most CDs lock in your rate for the entire term. For example, if you open a 1-year CD at a 0.50% APY, you'll earn 0.50% for the entire year. If you renew your CD after it matures, you'll earn the new rate available in a year.

There are exceptions to the fixed-rate rule. Some institutions offer variable-rate CDs or CDs that allow your rate to change after a predetermined amount of time.

Which is best: a 1-year, 3-year, or 5-year CD?

Terms of one, three, and five years are some of the most common CD options. Your choice will likely depend on how soon you plan to need the money and which term pays the highest rate. For the most part, longer terms pay higher rates – but that isn't always the case.

Also, going for a shorter term gives you the opportunity to snag a better APY if rates are up in a year. With a 3-year or 5-year CD, you could miss out on higher rates. But on the other hand, you could avoid lower rates with a 3-year or 5-year term if rates drop later.

Many experts recommend CD laddering. With this strategy, you open multiple CDs with different term lengths so you can take advantage of higher rates with longer terms, but also access some of your money earlier. For instance, you might open 1-year, 3-year, and 5-year CDs at the same time, which means you'll get some of your money back in one year, then more in three years, then more in five years.

See Insider's picks for the best CD rates »

Which is better, a 1-year CD or a high-yield savings account?

The choice between a 1-year CD and high-yield savings account will depend on several factors.

First, a bank typically pays a higher rate for a 1-year CD than for a high-yield savings account. However, that's not always the case, and the rates can be pretty close.

But a 1-year CD locks in your rate for the entire year. If rates are dropping, this could make the CD a better choice, because your savings account APY could decrease throughout the year. If rates are rising, the savings account might be a better fit, because your rate could go up.

It also depends on when you'll need to access your money. You should be able to access funds from your savings account regularly – but if you need access to money from your 1-year CD before it matures, then you'll have to pay a fee.

You can also continuously add money to your savings account, whereas most 1-year CDs block you from making additional deposits after opening the account.

See Insider's picks for the best high-yield savings accounts »

Which is better, a 1-year CD or a money market account?

Like with a high-yield savings account, you may prefer a money market account over a CD if you want quick access to your money. Money market account rates also fluctuate, so you may prefer a money market account if rates are rising, but a CD if rates are dropping.

Many banks require higher deposits for money market accounts than CDs, which could affect your decision. It's also good to remember that you can add more funds to your money market account over time, while a CD only allows an opening deposit.

See Insider's picks for the best money market accounts »

Which is better, a 1-year CD or another investment account?

CDs aren't generally considered investments the same way something like an index fund, which puts your money into the stock market, is. Instead, a CD is typically viewed as a type of savings account, and your potential for losses and gains – your risk – is much more limited. Because the stock market is risky, experts generally don't advise investing money you'll need in the next five years. In the case of a stock market drop, you wouldn't have time to make up your losses.

If you need to access your money in a year and want a guaranteed rate of return, a 1-year CD is a better choice than a different type of investment account.

If you're comfortable parting with your money for longer and want to take more risk with your money, then you may want to invest in the stock market. One way to do this is through tax-advantaged retirement accounts, like a 401(k) or IRA, which grows your money over decades. Another is through brokerage accounts, which are useful tools to build long-term wealth, but can't guarantee a given return like a CD can.

There is such a thing as an IRA CD, which is sort of a combo savings/investment account. It's a safe investment tool that may be a worthwhile option for people who are close to retirement age.

Related Content Module: More on Certificates of Deposit

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The best 1-year CD rates for July 2021