1-Year CD Rates from Online Banks 2022
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 - January 16, 2022
1 Year CD National Average: 0.40% ?
| BANK | APY? | MIN? | ||
|---|---|---|---|---|
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Restrictions |
0.85% | $1,000 | Learn More | |
Early Withdrawal Penalty is all interest earned. |
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Gunner | Dec 21, 2021 I can positively state that poor customer service is the reason why businesses sink. Pentagon Federal online media agent is limited and most times useless. The wait time on the telephone to be asked nam... |
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0.85% | $100,000 | Learn More | |
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Rob | Jan 15, 2022 It would be insanity to lock into a 1-year CD at 0.85 with this "bank" when they are paying 0.75% on a savings account and the Fed is going to hike to at least 1% by the middle of the year (and both CD and... |
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0.75% | $2,500 | Learn More | |
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Regan Dave | Nov 13, 2021 Rate is not unattractive in this environment but I will wait until January or February and see where things are then. |
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0.73% | $5,000 | Learn More | |
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DaveJ | Jun 21, 2021 Bad experiences with this bank and maturing CD's. I wanted the funds returned to my external bank and not rolled over into another CD. After several phone calls, and messages sent through their secure mess... Read More |
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0.67% | $500 | Learn More | |
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Johanna | Dec 16, 2021 This is the one. I've been a customer for many years. Never a problem. Great service. Rates are always consistently among the best. No need to constantly move. Read More |
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0.65% | $1,500 | Learn More | |
Early Withdrawal Penalty is 180 days interest. |
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Ulysses | Nov 9, 2021 Quirky website and lousy rate, but this is where we are what you need to do to avoid the zero-point-zero-one. Read More |
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0.65% | $2,500 | Learn More | |
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Larry | Apr 29, 2021 You will not collect any interest and lose a good chunk of the principal. They don't take all of it you will still recover some money. The early withdrawl clause is always part of the terms you acknowled... |
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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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Restrictions |
0.61% | $5,000 | Learn More | |
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AlH | Oct 26, 2021 Not the easiest process and you really need to think twice before joining a credit union to make a little more on your cash. For me it was worthwhile and Cathy was super helpful. |
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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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Kevin | Jan 3, 2022 Perfect credit and I was denied opening an account with NO explanation. Is this bank legitimate or some sort of scam? Read More |
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0.60% | $1,000 | Learn More | |
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Iman | Mar 4, 2021 They are liers. Please don't open their credit cards to avoid being taking advantage of!!! I hope they bankrupt SOOOOOON. Read More |
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0.60% | $2,500 | Learn More | |
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j975 | Nov 6, 2021 Website agonizingly SLOOOOOWWW. Only 3 linked external accounts allowed. |
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0.60% | $2,500 | Learn More | |
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JC | Jun 1, 2021 Update: STAY AWAY FROM THIS BANK! They have no clue how to run an online bank. This bank is not ready for prime time. Nothing but problems. Customer service is dismal at best. |
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0.60% | $10,000 | Learn More | |
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Eldridge D. | Feb 7, 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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David | Jul 16, 2021 David |
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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 9, 2021 Unprofessional in every way imaginable. |
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0.55% | $0 | Learn More | |
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GAM | Nov 8, 2021 As of 11/03/2021 online savings rate increased to 0.50% |
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0.55% | $1,000 | Learn More | |
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Cheryl | Jul 15, 2021 I finally closed my account. Was great back in the day as everbank but now it is a joke in every way. Read More |
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0.55% | $1,000 | Learn More | |
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Julia N | Jan 3, 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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0.55% | $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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0.55% | $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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0.55% | $2,500 | Learn More | |
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Pjamas | Sep 14, 2020 two thumbs up Read More |
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0.55% | $25,000 | Learn More | |
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JC | Nov 5, 2021 I opened an interest checking account with Ally after reading all the glowing comments online. My first experience with Ally was anything but glowing. The customer rep tried to charge me $15 for a debit ca... 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% | $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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0.45% | $500 | Learn More | |
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JaySN | Dec 6, 2021 Works fine, but I wish interest were credited monthly and not quarterly. |
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0.45% | $500 | Learn More | |
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Delays, delays, delays | Jan 7, 2022 Whatever you are gaining by having this account (0.05% over Ally or Marcus) you are losing when they take a week to make a simple bank transfer. 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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0.45% | $5,000 | Learn More | |
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Taykadip | Jan 4, 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% | $500 | Learn More | |
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BW | Jul 17, 2021 I've been with this bank for 6 months and have not had any problems. Bill pay works good. The 24 month investing CD is another vechile I use. Rates are above average considering the national rate. I'd reco... Read More |
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0.40% | $1,000 | Learn More | |
Early Withdrawal Penalty is 180 days interest. |
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Jay | May 10, 2021 Dollar Savings Direct is as close as anything gets to a scam without being labeled a scam. CDs renewing below market rates at no notice. Savings rates going above market levels and then way below (again no... Read More |
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0.40% | $1,000 | Learn More | |
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opal@8 | Dec 13, 2019 yes good |
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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 8, 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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Jason | Jun 20, 2018 Their website says the offer is going away tomorrow at 9AM EST. Hurry! 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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carscoupons@comcast.net | Sep 6, 2019 Went to bank yesterday this is not a good rate. Needs to be updated. Read More |
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0.30% | $25,000 | Learn More | |
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me | Oct 13, 2021 Good for savers. Easy to transfer funds in and out, not paying high transaction processing $ or being limited to low amounts per day. Does not subject applicants to very much ID interrogation and apparent... Read More |
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0.30% | $25,000 | Learn More | |
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aprz | Jul 3, 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% | $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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GAM | Dec 8, 2021 Marcus (GS) and Barclay high yield savings both 0.50%. Read More |
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0.20% | $0 | Learn More | |
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Rebecca01 | Aug 3, 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 5, 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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Puffin | Dec 28, 2021 I made a deposit and issued a check which arrived and they bounced it although they claimed the deposit cleared which left us spending Christmas pennyless. We depended on that money to buy ourselves food ... 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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Rob | Jan 15, 2022 I've done some work with these guys. This is a New Jersey-based bitcoin ponzi scheme run by a bunch of 30-something Wall Street throw aways. If you must chase 51 bps, I suggest you do it somewhere else. Read More |
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0.18% | $1,000 | Learn More | |
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Keep your friends close but your enemies closer than that. Guess which one would be you OZ. | Sep 20, 2021 Run for them hills and quickly too I might add if you want to keep more of your money than you put in their process for any length of time. If they can run a automatic payment to come out of my account ev... |
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0.15% | $500 | Learn More | |
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Afeica | Aug 7, 2020 Had a car loan with them. Paid it off because I was selling the vehicle. They told me it would take 10 business days to clear the transaction (it was immediate via electronic) and was out of my account th... Read More |
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0.15% | $500 | Learn More | |
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fdknef | Jul 9, 2021 "Vio" application process is defective, I used to work on bank security so truthfully responded. Requires documentation which I sent in at length and then got denied because of unknown reasons. Have excell... Read More |
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0.15% | $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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nonsense | May 21, 2021 avoid this Read More |
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0.15% | $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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Restrictions |
0.15% | $100,000 |
Learn More
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Restrictions |
0.10% | $500 |
Learn More
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0.10% | $500 | Learn More | |
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Mike | Jan 10, 2022 Opened for the higher rate. Somewhat tricky to get the account opened, and I am disappointed to learn that albeit a Massachusetts bank it does not do DIY so cannot deposit over 1/4 mil. |
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Restrictions |
0.10% | $500 |
Learn More
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0.10% | $5,000 | Learn More | |
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Jeff | Oct 28, 2021 The website is easy to use. The savings rates for an online bank are terrible. Read More |
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0.05% | $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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0.03% | $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 - January 2022
| Bank Institution | Product Term | Interest Rate (APY) |
|---|---|---|
| Pentagon | 1-Year | 0.85% APY with $1,000 minimum |
| Live Oak Banking Company | 1-Year | 0.75% APY with $2,500 minimum |
| Colorado Federal Savings Bank | 1-Year | 0.73% APY with $5,000 minimum |
| Pentagon | 3-Year | 1.00% APY with $1,000 minimum |
| Popular Direct | 3-Year | 0.95% APY with $10,000 minimum |
| Colorado Federal Savings Bank | 3-Year | 0.92% APY with $5,000 minimum |
| Pentagon | 5-Year | 1.30% APY with $1,000 minimum |
| Connexus | 5-Year | 1.21% APY with $5,000 minimum |
| Comenity Direct | 5-Year | 1.10% APY with $1,500 minimum |
PRODUCT INFORMATION
One-Year CD - Online Banks 2022
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.