1-Year CD Rates from Online Banks 2021
Certificates of deposit (CD) rates from online banks are often above average if you are willing to open and manage your account using the Internet. Most online banks offer an online application and money can be transferred to fund the CD via an electronic transfer, check, wire, or credit card. You can view a financial snapshot of any online bank by clicking on its name and then the Financial Details tab.
Highest One-Year Online CD Rates - April 15, 2021
1 Year CD National Average: 0.41% ?
| BANK | APY? | MIN? | ||
|---|---|---|---|---|
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0.67% | $500 | Learn More | |
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Matterhorn Peak | Apr 03, 2021 Communication fails. I attempted to open an account online. Just reaching a person took way too long, Bank required loan pull from an existing account first--a potential red flag to both my investment comp... Read More |
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0.65% | $1,000 | Learn More | |
Early Withdrawal Penalty is all interest earned. |
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Jeffinnh | Mar 30, 2021 These guys are the best local bank. Very responsive. |
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0.65% | $2,500 | Learn More | |
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AO516 | Mar 29, 2021 Not the smoothest website, but good enough and they are staying competitive. I first opened the account 2 years ago after seeing it advertised here and have no had no reason to close. I have had both savin... |
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0.65% | $2,500 | Learn More | |
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JC | Nov 02, 2020 WARNING! I just opened a new account and at this time you CANNOT transfer or withdraw your funds via ACH through them. You may use an external bank's ACH to withdraw, however. No where on their website is ... |
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0.65% | $25,000 | Learn More | |
Warning: Early Withdrawal Penalty is 2% of the account balance. |
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Al | Apr 12, 2021 Frustrating. The initial application form is a breeze. Then the problems start. Many hoops to jump through. |
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0.63% | $1,500 | Learn More | |
Early Withdrawal Penalty is 180 days interest. |
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J Finerman | Mar 06, 2021 No problems. Easy to open and use. Read More |
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0.60% | $1,000 | Learn More | |
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Julia N | Jan 03, 2021 This is the worst online banking I have seen. Without any warning they restricted access to withdrawals to $1000. Representative said they implemented on ALL accounts for ALL customers due to “fraud”... Read More |
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0.60% | $1,000 | Learn More | |
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CHow1975 | Nov 18, 2017 This is a decent account until you need to withdraw something and then it is hell on wheels. Read More |
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0.60% | $1,000 | Learn More | |
Early Withdrawal Penalty is 180 days interest. |
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Jim Plew | Apr 22, 2015 Hello, I am interested in a line of credit against my home. I have a high interest credit card that I want to move to this credit. I have a wells fargo mortgage which is only a few years old which I do no... |
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0.60% | $1,000 | Learn More | |
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Savvysaver | Jun 26, 2020 Rate not current Read More |
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0.60% | $2,500 | Learn More | |
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Pjamas | Sep 14, 2020 two thumbs up Read More |
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0.60% | $10,000 | Learn More | |
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Eldridge D. | Feb 07, 2021 I cannot comment on Bankdirect, but I can comment on the Bask Bank subsidiary. Opening this account to earn AAdvantage miles is the best move I've made in years! I am getting 100,000 frequent flier miles... Read More |
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Restrictions |
0.60% | $100,000 | Learn More | |
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Savvysaver | Jun 25, 2020 Sorry, not 1.30% APY. 1.05%, 1.10% for balances above $100k |
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0.56% | $500 | Learn More | |
Warning: Early Withdrawal Penalty is the greater of: 90 days interest or all interest earned. |
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Jay Riesman | Apr 09, 2021 Unprofessional in every way imaginable. |
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0.55% | $1,000 | Learn More | |
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opal@8 | Dec 13, 2019 yes good |
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Restrictions |
0.55% | $5,000 | Learn More | |
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THOMAS STEPHENS | May 02, 2019 VERY CONFUSING WEB SITE AND DIRECTIONS |
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0.55% | $25,000 | Learn More | |
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EduardoC | Dec 12, 2020 "keeping their savings rate competitive" - they aren't. Read More |
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0.50% | $500 | Learn More | |
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new name for a dreadful bank | Dec 13, 2016 This was formerly First Trade Union bank. Use Ally, Barclays, Synchrony or some bank that provides a certain level of service. |
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0.50% | $1,000 | Learn More | |
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John t. | Jul 24, 2020 Went to renew a cd at branch in Jacksonville Fl , on main street, they said I would have to keep driving around building , if any cars came in behind me. They have 2 drive throughs and wouldn't open other... Read More |
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0.50% | $1,000 | Learn More | |
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Joy | Feb 28, 2021 ACH transfers limited to $3,000, unsecured website, emailing acct numbers, hours to reach customer service. Need not say more. |
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0.50% | $2,000 | Learn More | |
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Peter C2 | Jan 23, 2021 In terms of service, you cannot do anything online. On every other bank, you can message someone online and get a quick response. You need to call Synchrony and speak with someone in the Philippines. N... Read More |
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0.50% | $2,500 | Learn More | |
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EBHYT | Aug 04, 2020 Sallie Mae is going to absolutely be the right bank for you if you enjoy calling during normal business hours and speaking with a automated voice response system that gives you no information and refuses t... |
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0.50% | $2,500 | Learn More | |
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JayC | Jan 05, 2021 i went to open an account. I discovered the bank is based in Tennessee. TNs two senators are voting to decertify the election. I will not open an account here and neither should you. I wish the bank were... |
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0.50% | $5,000 | Learn More | |
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CD Matured | Dec 10, 2019 My CD matured and they sent the money back. I am not getting a new CD now since rates are too low. I just wanted to say that the people were absolutely wonderful to deal with. Read More |
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0.50% | $25,000 | Learn More | |
Early withdrawal penalty is 6 months interest. |
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SandyB | Aug 25, 2020 Bank is owned by a Florida bank and yet I wasn't able to open an account because I live in Florida. Go figure! Read More |
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0.50% | $25,000 | Learn More | |
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HRT54 | Dec 03, 2020 Awful customer service. It is so bad you cannot go near. |
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0.45% | $500 | Learn More | |
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Amy2B | Mar 11, 2021 Prime Alliance is another one of these tiny Utah banks that sometimes competes for deposit dollars. It is a little strange with all of the limitations on transfers but these limitations are easily defeated... |
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0.45% | $500 | Learn More | |
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JO | Mar 31, 2021 It took 7 days to perform an ACH transfer. Even worse than Synchrony and Interactive Brokers which are both known con jobs. Closed account. Done. Read More |
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0.45% | $500 | Learn More | |
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Jazzy in Georgia | Mar 25, 2021 Completely excessive number of customer service phone calls after setting up account. Well meaning, but over the top. |
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Restrictions |
0.45% | $1,000 | Learn More | |
Early Withdrawal Penalty is all interest earned. |
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LizaBBBB | Sep 06, 2020 Yes, Pentagon had good rate initially, but it disappeared at renewal. We have top credit score (835). |
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0.45% | $5,000 | Learn More | |
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Taykadip | Jan 04, 2020 I am surprised at all the negative reviews. I have had several large CDs at this bank for several years, and I've gotten the best customer service I've ever gotten at any bank in the last 45 years. Read More |
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0.40% | $0 | Learn More | |
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WallyC | Dec 11, 2020 All the good reviews on this site are planted by the bank. This is the worst. It used to be good and the transfer speed is good. Still they lower their rates below anyone else and do it without the notice ... |
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0.40% | $500 | Learn More | |
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Savvysaver | Jun 27, 2020 Agree with "Cannot recommend", this is a bricks and mortar bank with a very limited online presence. Read More |
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0.40% | $1,000 | Learn More | |
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Dudley | Apr 18, 2018 Worst experience of my life. Did not fund and gave $25 to my own charity. Read More |
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0.40% | $1,000 | Learn More | |
Early Withdrawal Penalty is 180 days interest. |
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TrentR | Sep 30, 2020 Website hasn't been working for over a week now. Just great how they manage to go down as rates start to fall. :) I am so very done with this nonsense. Read More |
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0.40% | $1,500 | Learn More | |
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Savvysaver | Jun 25, 2020 Nope. As with the CIT quote 1.25% APY is a bit optimistic. Banesco's site offers .90%. |
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0.35% | $1,000 | Learn More | |
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BeccaB-88 | Jul 21, 2020 Opened account a month ago. I've already seen the rate fall a couple of times, but have no other complaints. Easy process and a clear easy to use site (unlike Ally where I was before). Read More |
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0.35% | $10,000 | Learn More | |
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LarryMass | Dec 08, 2020 Everyone here in Boston raves about Salem Five but it is shithole operation filled with nasty entitled people. As for this online savings product, the fees are ridiculous, the transfer charges are obnoxiou... Read More |
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0.30% | $500 |
Learn More
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0.30% | $500 | Learn More | |
Warning: Early Withdrawal Penalty is 12 Months of Interest |
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Anonymous | Jun 20, 2018 great find Jason, looks like this really was a to good to be true rate Read More |
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0.30% | $1,000 |
Learn More
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0.30% | $10,000 | Learn More | |
Early Withdrawal Penalty is 1% of principal. |
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Jeff | Dec 26, 2018 I think it is 1% on 1-year CDs and 2% on anything between 1 and 4 years. Not great, but not the worst I have seen. Read More |
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0.30% | $25,000 | Learn More | |
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jazyGirl | Dec 11, 2020 I did not like the rate drop yesterday fellas. This went from great to good to average to poor in no time! Read More |
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0.30% | $25,000 | Learn More | |
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aprz | Jul 03, 2019 Just set up an account. Don't know long term yet, however they were (Kelsey) a dream to work with. |
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0.25% | $1,000 | Learn More | |
$1,000 minimum deposit to open an account. A penalty may be imposed for early withdrawal. Account fees may reduce your earnings. |
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Eleanor | Jan 04, 2021 The rate is 0.25% on balances under $300,000. Nobody in their right mind is going to go over $250,000 in this bank. Bestcashcow should remove it. Read More |
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0.25% | $2,500 | Learn More | |
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dbestway@gmail.com | Aug 13, 2019 I filled out the application 10 days ago answering all questions and sent a file with a copy of my drivers license to Western Bank. I received an email saying that a banker would call me within one busines... |
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0.25% | $10,000 | Learn More | |
Early Withdrawal Penalty is 181 days interest. |
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Gustavo L 18 | Feb 28, 2020 Purepoint is great. Only Citizens Access is better and I've had all of these. I have nothing to gain by saying this, but I would opt for Purepoint when the rates are comparable. Read More |
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0.25% | $10,000 | Learn More | |
Early Withdrawal Penalty is 270 days interest. |
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TulsaGirl01 | Apr 10, 2021 I opened an account a couple of years ago and had a dreadful experience. I saw two weeks ago that the rate was better than at Citizens so I closed that account for this one. I cannot access my money now or... Read More |
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0.20% | $0 | Learn More | |
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Rebecca01 | Aug 03, 2020 There is a lot to like about this account. American Express is a real organization and you are not playing with a bunch of amateurs like with a lot of these banks. However, they will be sure to lower the ... Read More |
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0.20% | $1,000 | Learn More | |
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Joe | Dec 05, 2020 I know rates are variable, at their discretion*, but in the time frame of 9 months their rates have dropped to 1/3 of what they were ! is that what some call a teaser rate in the beginning ??? Read More |
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0.20% | $1,000 | Learn More | |
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h65c | Mar 11, 2021 Seems to be a different rate depending which site you come from. I guess 0.60% is from BestcashCow, but I saw 0.80% on Magnify. Read More |
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0.20% | $1,000 | Learn More | |
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GAM | Jul 28, 2020 Dropped rates again with restrictive transfer limits and poor service. Better rates and liquidity elsewhere. Beware!!! Read More |
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0.20% | $50,000 | Learn More | |
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Savvysaver | Apr 28, 2020 Party's over, folks. One year CD, minimum $50k now yields just 1.41%. Read More |
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0.18% | $1,000 | Learn More | |
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ruth | Aug 19, 2020 Customer service is horrible with this bank. Beware! |
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0.15% | $500 | Learn More | |
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The Duffster | May 21, 2018 I wish I had never heard of or seen BBVA. It has been a disaster. Came to this site to find something else. Read More |
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0.15% | $500 | Learn More | |
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Sticking With Better Known Names | Apr 10, 2021 This isn't a bank. It is a scam to get your personal information. It should not be listed here. They have no interest in doing business with you. Read More |
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Restrictions |
0.15% | $100,000 |
Learn More
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Restrictions |
0.10% | $500 |
Learn More
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Restrictions |
0.10% | $500 |
Learn More
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0.10% | $5,000 | Learn More | |
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Jeremy | Aug 25, 2020 I cannot say that I am too happy about the rate, but the service on this one is excellent. Read More |
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0.07% | $1,000 | Learn More | |
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Azblondie007 | Feb 24, 2020 I had been with USAA for 20 years. Had my checking, savings, auto and renters insurance and 2 credit cards with them. I work in the service industry and make a good portion of my income in cash tips. For 4... Read More |
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Summary: Today's Highest Online CD Rates - April 2021
| Bank Institution | Product Term | Interest Rate (APY) |
|---|---|---|
| CFG Bank | 1-Year | 0.67% APY with $500 minimum |
| Live Oak Banking Company | 1-Year | 0.65% APY with $2,500 minimum |
| Comenity Direct | 1-Year | 0.63% APY with $1,500 minimum |
| Comenity Direct | 3-Year | 0.85% APY with $1,500 minimum |
| First Internet Bank of Indiana | 3-Year | 0.81% APY with $1,000 minimum |
| Connexus | 3-Year | 0.75% APY with $5,000 minimum |
| Primary Bank | 5-Year | 1.15% APY with $1,000 minimum |
| Connexus | 5-Year | 1.00% APY with $5,000 minimum |
| First Internet Bank of Indiana | 5-Year | 0.96% APY with $1,000 minimum |
PRODUCT INFORMATION
One-Year CD - Online Banks 2021
Certificates of Deposit (CDs) are offered by most banks in a variety of maturity dates. The 1-year rates in the table above are listed in descending order based on Annual Percentage Yield (“APY”) which is the rate of return that you will earn, when adjusted for compounding, over a 12 month period, and the way in which banks are required by US banking regulations to advertise their CD rates.
A certificate of deposit represents a time commitment between a depositor (someone who has money to put in the bank) and a bank. The depositor agrees to leave a specified amount of money in the bank for a set period of time. The bank agrees to keep the money safe and to provide a fixed rate of return.
A 1-year CD has a very brief time commitment and can also generate a rate of return above the prevailing savings rate. Therefore, many people use 1-year CDs to slightly augment their rates of return over savings with only slightly more risk than they would have if they were entirely in savings accounts and money market accounts.
FDIC Insurance
Provided the bank is FDIC-insured and the deposit amount is within FDIC limits, the principal is also secured by an agency of the United States federal government against loss. Further information about FDIC insurance is found in this article and if you have specific questions about your own circumstances you should use the FDIC’s Electronic Deposit Insurance Estimator.
CD Risk
The principal of a CD is safe and insured as long as the deposit amount is FDIC limits. Interest that accrues and is paid or deposited to the principal also is safe as long as the total balance remains within FDIC limits.
A CD however bears two significant risks:
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Liquidity risk
If you think you may need access to your principal during the period of the time commitment for a major purchase or an unforeseen expense, CDs are generally not a good place to store money. The terms of most CDs outline the penalty that will be assessed in order to access your capital. This penalty is usually assessed in terms of time periods. For example, a common penalty on a 1-year CD is 3 months, although you should always check this carefully in the terms and conditions before opening a CD as it could be longer. Banks and credit unions are not obliged to offer an early withdrawal penalty, and may change or remove or even refuse to honor the early withdrawal penalty in their paperwork. For further details, please read this article. BestCashCow never recommends a strategy involving the purchase of a CD when you have a high likelihood that you will need your capital. Inflation risk
Since CDs are considered a very safe investment when you stay within FDIC and NCUA-limits, they often do not pay much over the anticipated rate of inflation, and can often pay under this rate. Were interest rates to rise (or the inflation rates to rise), the real or inflation -adjusted value of your CD can drop over time, especially when you factor in the tax consequences of ownership of a CD. In the event of rates rising, you may be able to use the early withdrawal penalty to get your principal but for the reasons mentioned above, BestCashCow does not recommend relying on such a strategy.
Be sure to think about how CDs fit into your overall portfolio objectives.
CD Laddering
An effective strategy used by many to bolster their savings strategy is to own CDs with various maturities. In other words, a depositor with $400,000 and put $100,000 in a 3 month CD, $100,000 in a 6 month CD, $100,000 in a 9 month CD and $100,000 in a one-year CD, then your liquidity risk in highly diminished because you are always near maturity on one of your CDs. (Note that no more than 2 of these CDs should be at the same bank in order to avoid exceeding FDIC limits).
The reality is that we are in a very low interest rate environment, and any CD with a maturity of less than 1 year is going to pay below, perhaps well below, the prevailing rates in the leading online savings accounts or at brick-and-mortar banks. Therefore, the strategy outlined above would be largely absurd in the current environment.
A laddering strategy that would make more sense for the same depositor who might otherwise hold $400,000 in cash would be to put $100,000 in a one year CD every three months. Liquidity risk in the same way is diminished as the depositor is never more than 3 months from maturity, yet the depositor is picking up some small improvement over the best savings rates than where all of his money to be in cash.
Laddering strategies can also involve longer term CDs, but one that involves terms as little as 1 year can improve on the savings rates with minimal impairment to your liquidity.
More information on CD laddering is available in this article.
How Interest is Paid
The method of distributing the interest earned on a CD varies by bank. Some banks pay interest monthly, other semi-annually, and others at the maturity of the CD. In general, online banks pay the interest electronically either by adding it to the principal balance or with an ACH transfer back to the depositor's primary linked checking account. Other online banks may pay via a check in the mail.
Interest Rate
Currently, the most competitive banks offer 1-year rates that are slightly above the top online savings and money market rates. Depositors need to decide if they want the fixed rate of the CD or the flexibility of the savings account (savings accounts do not come with any term time requirements).
In a rising rate environment, it is generally better to keep money flexible and liquid and put it into either short term CDs or savings or money market accounts. In a falling rate environment, it is generally better to lock the rate using a CD or some other fixed rate investment. In a stable rate environment, you may be able to collect a small premium in exchange for your loss of liquidity.
Online banks generally offer CDs available to residents of any of the 50 states. The CD must be opened online and funded either by online transfer or by mail.
FREQUENTLY ASKED QUESTIONS ON CERTIFICATES OF DEPOSIT
What are CD rates?
CD rates are the fix rate that the bank pays a depositor for entering a CD for the entire term of a CD. They are expressed in annual percentage yield (“APY”) terms, so that they are standardized. $100,000 invested in a one year CD at 1% will be worth $101,000 at maturity in exactly 1 year. $100,000 invested in a two-year CD at 1.50% will be worth $101,500 in exactly 1 year and worth $103,022.50 at maturity (assuming the interest is not paid out before maturity, but is added to the principal). Please see BestCashCow’s Savings & CD Calculator to better understand the magic of compounded interest over time.
Do CDs Pay Interest Monthly or Yearly?
When opening a CD, it is important to consider how interest is credited or paid. Interest can be credited to the CD monthly, quarterly or annually. For those CDs of one year or less, interest may be credited only at maturity.
When interest is paid, the CD holder may have arranged for the interest to be mailed to them as a check. The other option is for the interest to be added to the principal of the CD.
Regardless of how and when interest is paid, it is required to be expressed (standardized) by all banks in the form of an annual percentage yield (“APY”) rate.
How Is Interest on CDs Taxed?
Interest on CDs is taxed as ordinary income. Your bank will provide you with a 1099-INT detailing the interest that you must report on your tax return at the end of each year. Regardless of whether interest is paid in the form of a check or added to principal, CD holders need to report the interest in the year in which it is paid. Purchasing a Certificate of Deposit of one-year or less that pays a single lump sum interest payment at maturity may defer tax on interest until the following year, but otherwise holders of CDs should generally expect to pay ordinary taxes on interest earned in every year in which they hold a CD. Further detail is found in IRS Publication 550 (page 5).
Why Are CD Rates So Low?
CD rates on terms of 1 and 2 years were very constantly low for many years from 2009 to 2015 as the Fed Funds rate was held at zero following the great recession. Rates on longer term CDs were occasionally more interesting during this period (depending more heavily on the level and direction of the US Treasury Bond).
The US Federal Reserve’s action towards normalizing interest rates has been painfully slow (resulting from Brexit, European financial instability, etc.), and CD rates have remained at levels that are very low by historical norms. However, we have seen CD rates rise in 2016 and 2017 as the Federal Reserve has begun to slowly raise the Fed Funds rate.
Are CD rates going up or down? When are they expected to rise?
If the Federal Reserve accelerates its plan to raise the Fed Funds rate or if global economic developments were to cause US treasury rates to rise, we would quickly see higher CD rates. However, the global economic environment is uncertain with European long-term interest rates being negative. Should the US also enter a recession and the US 10-year Treasury rate fall still further, it is possible that CD rates could fall further.
What is a good rate for a CD?
BestCashCow lists the best CD rates available from online banks above, and the best rates from local banks and credit unions. A good rate is the best rate that you can find at an FDIC or NCUA-insured institution, provided that it compensates you adequately over the best savings rates for the liquidity that you are giving up. Only you can determine based on your own personal circumstances whether that is a good CD rate for you. BestCashCow’s Savings & CD Calculator can help you to understand how much more interest a CD can generate over a savings account.
Is there an advantage to a 12-Month Certificate of Deposit over Online Savings Accounts?
At any moment in time, there is ordinarily a premium to an online 12-month CD rate over an online savings rate. The table below demonstrates the spread between the two over the last several years. Whether it makes sense for you to take advantage of these higher rates in the 12-month rate depends on your own need for liquidity and your view on whether and how fast savings rates will rise.
ADVANTAGES AND DISADVANTAGES
The advantages of online one-year CDs are:
- Funds deposited in FDIC banks and within insurance limits are protected by the full faith and credit of the United States government.
- CDs provide a predictable, set rate of return.
- The CD can be opened from the comfort of your house.
- The CDs are generally available to any resident of the United States.
The disadvantages of one year CDs are:
- One year CDs pay interest rates that are just above the leading rates offered on online and branch-based savings and money market accounts. There is a very slight premium for having the money locked up for one year. Your own circumstances and tax rate will help you to determine if that premium provides adequate compensation to you for your loss of liquidity.
- The deposited money is committed for one year.
- The account must be opened online and all inquiries must be conducted online or via the phone.
- Depending on the bank, the opening and funding process can take several days to weeks although the bank generally locks the rate once the application has been received and approved.
All banks listed on BestCashCow are FDIC insured; BestCashCow.com strongly recommends that you stay within FDIC insurance limits and that if you are unsure of how the limits affect you, please visit the FDIC website.
To understand all of the income generating options available to a saver, please view the Income Generating Investments Comparison Chart.