1-Year CDs Offer Superior Returns to 1-Year US Treasuries for Everyone
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1-Year CDs Offer Superior Returns to 1-Year US Treasuries for Everyone

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1-Year Certificate of Deposit offerings remain quite strong. As of the date of this article, there are at least 8 online 1-year CDs being offered at 5.15% or higher. Depending on where you live, you will probably also find 1-year CDs from local banks and credit unions at or above this level. Banks are competing for your money, especially if you are willing to forgo liquidity for one year.

At the same time, US Producer Price Index (PPI) and US Consumer Price Index (CPI) data released last Thursday and Friday indicated that inflation may be below 5%. As a result, market participants have begun to price in an increased likelihood that the Fed will cut the Fed funds rate below its current 5.00 to 5.25% target before the end of 2023. US Treasuries with maturities in May 2024 are now trading at yields between 4.70% and 4.75%.

Even for those in the highest tax brackets in New York City or California where state and local taxes can total 10%, one-year US Treasuries are going to net less after tax than 1-year CDs. Plus, 1-year CDs allow the opportunity to diversify holdings in case of a catastrophic US government default (although it is possible that banks could be equally or more impacted in a default so you should always stay below FDIC limits).

For those willing to go out 18 months or more, the advantage of CDs can be even more attractive. BestCashCow shows at least a handful of 18-month CD offerings at or above 5.00% and US Treasuries maturing around November 15, 2024 are now yielding below 4.35%.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding BestCashCow in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
Charles Schwab Bank, SSB 1-Year 5.40% APY with $1,000 minimum
Finworth, a division of InsBank 1-Year 5.38% APY with $50,000 minimum
TotalDirect, a division of City National Bank of Florida 1-Year 5.35% APY with $25,000 minimum
Dollar Savings Direct, a division of Emigrant Bank 3-Year 5.00% APY with $1,000 minimum
M.Y. Safra Bank 3-Year 4.70% APY with $500 minimum
First Internet Bank of Indiana 3-Year 4.66% APY with $1,000 minimum
First Internet Bank of Indiana 5-Year 4.55% APY with $1,000 minimum
BMO Alto, a division of Bank of Montreal Harris 5-Year 4.50% APY with no minimum
Department of Commerce 5-Year 4.34% APY with $500 minimum

See More Online CD Rates →

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