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Understanding the 1-year CD rate table
The 1-year CD rates in the table above are listed from the highest Annual Percentage Yield (APY) to the lowest. By clicking on the “details” button on the right side of each row, you can view account details and rate history for that particular CD. If you click on the bank or credit union’s name, you will be taken to our hub for that financial institution. On this page, you can view a map of the branch locations, other product rates, consumer reviews, and many additional details of the institution.
Understanding the DepositAccounts 1-Year Online CD (1YrOCD) Index
The 1-Year Online CD (1YrOCD) Index is intended to provide a representative yield that’s available from today’s 1-year online CDs. The Index is the average yield of ten mature 1-year online CD accounts from well-established online banks. The 1-year online CDs must have at least two years of history with yields that have remained competitive. Promotional accounts are excluded from the Index so that consumers can learn what rates are reasonable to expect from 1-year online CDs. Changes in the 1YrOCD Index over the last two years are tracked and compared to the federal funds target rate.
Recent Changes in the DepositAccounts 1-Year Online CD (1YrOCD) Index
In the first two months of 2024, the average 1-year online CD yield had its largest two-month decline since May-June 2020. The average decreased 17.0 basis points in January and 15.4 basis points in February for a total decline of 32.4 basis points. The average fell from its peak of 5.345% on January 1, 2024 to 5.021% on March 1, 2024. This average is based on the 1YrOCD Index which is the average yield of ten 1-year online CDs from well-established online banks.
In 2023, the 1YrOCD index had been slowly approaching the upper limit of the federal funds rate, but that changed in January 2024 due to rising expectations for Fed rate cuts in 2024. Several online banks responded to these expectations by lowering rates on their CDs.
As can be seen in the 1YrOCD Index chart, online 1-year CD yields have generally followed the federal funds rate. Before August 2022, the upper limit of the federal funds target range had always been below the Index. Starting in August 2022, the upper limit started to exceed the Index, and that has continued into 2024. On March 1, 2024, the upper limit exceeded the Index by 47.9 basis points.
Why 1-year CD rates?
One-year CD rates provide a good benchmark for both rate watchers and issuing financial institutions alike. It’s not exactly a long maturity, especially when compared to 5- and 10-year terms. But it’s also not a short maturity, either, given the popular 3-month terms offered by many banks and credit unions. Call it the Goldilocks account: a 1-year CD gives savers the ability to secure an attractive return on their investment, but without locking up funds for too long, potentially causing them to miss out on better offers down the line.
1-Year CD Rate History – Average APY (%) Rate Trend Over Time
1-year CDs vs. shorter- and longer-term CDs
The 1-year CD is often the shortest CD maturity that offers the best rate advantage over savings accounts. Shorter-term CDs, such as 3-month or 6-month CDs, often have rates less than the rates of top savings accounts.
CDs with terms longer than one year typically have higher rates, but that’s not always the case. In certain environments, top 1-year CD rates can be close to top 5-year CD rates. In these environments, the only reason to choose a longer term is if you think it’s likely that rates will fall in the future.
The 1-year CD can often have a large benefit over longer-term CDs in its early withdrawal penalty. The penalty amount often rises for longer terms, and sometimes can go up substantially for terms just over one year. The smaller early withdrawal penalty can make it much less costly to close the CD and move funds into a higher-rate account if rates rise.
You can eliminate early withdrawal penalties completely by choosing a no-penalty CD. Most no-penalty CDs have terms of one year or close to one year. No-penalty CD rates are typically lower than traditional CD rates of similar maturities, but they are often higher than rates of savings accounts and CDs with maturities of under one year.
If you’re building a CD ladder, the 1-year CD will likely be one of the CDs to start the ladder. Whether the maximum length of your CD ladder is one year, two years or five years, a 1-year CD will be needed to start the ladder.