What is the average 1-year CD paying now?
A certificate of deposit (CD) is a savings instrument that lets savers earn a bit more in interest than they would in a regular savings account – with one catch. When you put money into a CD, you agree to keep it there for a specific period of time, generally between a few months to a few years. Otherwise, there are typically fairly substantial penalties for withdrawing your money before it has fully matured.
As the Federal Reserve has hiked interest rates over the past 18 months in response to rising inflation, interest rates for both high-yield savings accounts and CDs have gone up. This means that now is an excellent time to consider putting your money into a CD if you can afford to keep it untouched for the full CD term — and that's especially true for shorter-term CDs, like 1-year CDs, as they are currently offering much higher rates than most long-term CDs.
Start exploring CD rates now to learn what you could be earning in interest.
What is the average 1-year CD paying now?
As of September 2023, the average rate for a 1-year CD is 1.76%, according to the FDIC. The actual amount of money you'll earn, of course, is based on what you deposit. Here's what you could earn with the average 1-year CD rate after 12 months:
- $1,000 deposit: $17.60 (for a total of $1017.60)
- $5,000 deposit: $88 (for a total of $5,088)
- $10,000 deposit: $176 (for a total of $10,176)
That said, the 1.76% APY is just the average. Because many financial institutions have increased rates in recent months, it's possible to find banks offering 1-year CDs with rates that are much higher.
For example, there are several financial institutions offering CDs with rates that hover near 5.65% right now. Here's how the math works out for that rate:
- $1,000 deposit: $56.50 (for a total of $1,056.50)
- $5,000 deposit: $282.50 (for a total of $5,282.50)
- $10,000 deposit: $565 (for a total of $10,565)
Start boosting your savings with a 1-year CD today.
How to find higher CD rates
While those are the average rates across the country, you can likely find a much higher rate, especially if you look at online banks. Traditional banks have high overhead as they have physical locations around the country, which requires rents to be paid and maintenance to be done. Online banks don't have any of that, so they can generally offer higher rates.
Rates change frequently, so make sure you take the time to shop around and find the bank offering the best rate. You can also look for longer-term CDs if you want to let your money sit even longer and earn more interest – or consider building a CD ladder and really start stacking your interest.
The bottom line
A certificate of deposit is a safe, simple way to earn decent interest without having to take any real risk. With inflation still relatively high and the potential for market volatility still very real, a CD makes a lot of sense for savers and investors who want to outpace inflation but not worry about external factors impacting their money. And, with rates currently high thanks to actions from the Fed, now is an especially good time to consider using a CD as part of your savings plan. Just make sure you take the time to shop around and find the bank offering the best possible interest rate.
