We track the best 12 month CD rates of 2018. You’ll find information on fees, penalties, and minimum deposits for these certificates of deposit, too.
If you compare today’s best 12 month CD rates with historical rates, they may not be impressive. With the Federal Reserve keeping interest rates low for the near future, deposit accounts will not command the interest rates that were common before the recession.
Therefore, it may not make sense to lock in a rate for a long period of time. Once you agree to a term like five years, you’ll be stuck with it. Even if rates rise in the meantime.
This is a good approach in an environment where rates are high and possibly falling, but not a great idea when rates are low and possibly increasing. Nevertheless, you can often find better rates for CDs than for savings and money market accounts. So if you know you won’t need your savings for three months, six months, or a year, you might be able to achieve slightly higher interest payments from the bank. One drawback is there is often a penalty for accessing your cash before your term is up.
For the uninitiated, a certificate of deposit (CD) is considered a “time deposit.” CDs are generally considered cash or savings when it comes to asset allocation, but the “time” requirement presents a maturity date like a bond. This probably doesn’t matter for most individual savers and investors. But it does carry an important distinction for businesses whose investments are reported to regulatory authorities.
Like savings accounts, CD interest rates are compared using APY, annual percentage yield.
Best 12 Month CD Rates
Synchrony Bank just made a few shock waves by offering an 18 month CD at a 1.70% APY. But that’s not the bank’s best rate! The best rate actually goes to its 12-month CD that currently pays out at 2.15% APY. Yes, the 12-month CD pays a higher rate than the 18-month CD. They require a $2,000 minimum deposit to open the CD and Synchrony even increased their savings rate to a robust 1.55%.
Discover Bank offers a hassle-free banking experience. I am a current, happy customer. Discover offers a rate of 2.00% APY for their 12-month CD. Discover Bank also offers up a cash back checking account and high yield online savings account.
Ally Bank offers two unique types of CDs in addition to a traditional CD. The Ally Bank Raise Your Rate CD has a feature that mitigates the risk of CD rates increasing while you’re locked in. You’ll have one opportunity during the term of the CD to lock in the market interest rate. The shortest term offered is two years, though, not 12 months. The rate for this 2-year product is 1.75% APY as of December 19th, 2017.
Ally Bank also offers a No-Penalty CD, where you can withdraw your money at any time without a penalty. This term is slightly less than a year at 11 months, and the current rate is 1.50% APY for balances of greater than $25,000. For balances between $5,000 and $25,000 the rate is 1.25% APY and for balances less than $5,000, the rate is 1.15% APY.
The standard 12-month high yield CD nets an APY of 2.00% for balances of $25,000 or more. There is no minimum balance required.
GS Bank – Goldman Sachs recently threw their hat into the consumer deposits ring and are offering a 12 month CD at a great 1.80% APY. GS Bank also has an online savings account which offers an APY of 1.50%. There is a $500 minimum to open a CD and no minimum deposit to open a savings account.
GS Bank was recently named the best Stand-Alone Account for Savings by MONEY magazine. It’s rates are always in the top 1% of banks. However they do not offer any deposit products beyond savings and CD’s.
Capital One 360, the brand that emerged from Capital One’s acquisition of ING DIRECT, remains a mainstay of online banking and continues to set the standard for all other online banks. Like ING before it, Capital One 360 offers state-of-the-art banking products and delivers excellent customer service. The interest rate for Capital One 360’s 12-month CD is 1.65% APY.
American Express is a relative newcomer to online banking, but their products are compelling to offer here. I like my account with American Express. This bank offers a wide range of terms for CDs from six months to 60 months, with many intermediate terms. The interest rate American Express offers on their 12 month CD is 0.55% APY.
Sallie Mae Bank is also new to offering banking products, having been established in 2005. My account with Sallie Mae was the easiest to open. My only criticism is the lack of integration with Quicken and online tracking tools. Sallie Mae offers a strong 1.80% APY on the 12 month certificate of deposit.
Sallie Mae also offers a variety of other deposit options, including a Upromise Goal Saver account which allows you to save for college! (For yourself or one of your children).
One Year CD Rates vs. Online Savings Accounts
You may notice that a lot of CD rates above are better than the rates that a high yield online savings account can provide. So why not simply take your money and invest in a 12 month CD? Well there are two main reasons that banks can provide you a slightly higher APY.
- CD terms are absolute. Once you open a CD and deposit your money, you cannot withdraw the funds until the CD comes to full term. You stand to lose up to six months worth of interest by withdrawing early.
- Interest rates are locked. When a bank knows exactly what it’s paying you, it can lend your money for a better rate somewhere else. Savings accounts have fluctuating rates, so the rate you receive today may not be the one you get tomorrow.
If time deposits aren’t right for you and you’d like the ability to withdraw your money as needed, consider a high yield savings account from one of the best online banks. If you do like the idea of saving with CDs, consider creating a CD ladder to make the most of the highest CD rates.
Do you have a favorite bank, offering a compelling CD product, you’d like to see added to this list? Let me know by leaving a comment below.
Updated April 11, 2018 and originally published October 16, 2017.