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5 best reasons to open a one-year CD right now

Some one-year CDs today can earn above 5% APY and even up to around 5.50% APY. NIKOLA MILJKOVIC / Getty Images

In today's high interest rate environment, many savers are looking to maximize their savings balances with the best account. While there are plenty of options to earn 5% APY or even more on your money, the right account for you can depend on a variety of factors — how much you have saved, account access, fees, minimums and more. 

If you're still undecided, one type of account that should definitely be on your list today is a short-term CD. Specifically, one-year CDs can offer a combination of great interest rates, accessibility and more.

Start comparing how much you can earn on your balance with top CD rates today here.

5 best reasons to open a one-year CD right now

Here are just a few reasons why a one-year CD could be ideal for your savings balance now.

High interest rates

Among high-interest deposit accounts currently on the market, one-year CDs tend to offer the highest interest rates. Some one-year CDs today earn as much as 5.50% APY. By comparison, high-yield savings accounts tend to max out around 5% and the best longer-term CDs earn closer to 4.5% APY. Here are some examples of top one-year CD rates right now:

  • Popular Direct: 5.50% APY
  • Sallie Mae Bank: 5.50% APY
  • Merrick Bank: 5.40% APY
  • Bread Savings: 5.35% APY

Find more of today's best CD rates here!

Fixed interest rates

Not only do one-year CDs offer some of the best rates right now, but they also carry fixed interest rates — meaning you're guaranteed that high rate through the entire term. If the Fed decides to pause, or even reverse, rate hikes over the next 12 months, your CD rate will stay the same. 

This can also help you plan ahead for your savings goals, since you'll know exactly how much interest you'll earn over the lifetime of your CD. If you put $10,000 in a one-year CD today with a 5.50% APY, for example, you'll have a total balance of $10,550 when the CD matures. 

Shorter time commitment

For some, a downside of CDs is the requirement of locking your money in the account for the entire term length. If you need to access your balance early, penalty fees could wipe out some or all of the interest you earn. 

For savers who are wary of locking their money in a CD, one-year CDs could still be worth considering. The shorter length of time doesn't require as much commitment as longer-term CDs, but you still get the advantage of a higher interest rate. 

And with some planning beforehand, you can make sure you still have enough money in savings for emergencies so you don't need to risk withdrawing from the CD early.

Keep your money safe

On the other hand, having to lock your money in your CD account for the entire term could be useful for savers who are tempted to spend their money. The penalty fee can act as a deterrent from using your money for impulse purchases or other spending that's not the goal you have in mind for it.

Beyond protecting your balance from yourself, CDs are also safe. You don't have to worry about losing any money due to market fluctuations and any balances under $250,000 are insured by the FDIC in case of bank failure.

Explore your savings and CD options by comparing rates here now.

No-penalty options

For savers already considering a one-year CD term, there may be benefits to opting for a no-penalty CD. This type of CD is even more flexible with making withdrawals, since it charges no penalty fees for accessing your money early. 

No-penalty CDs most frequently come with term lengths around one year (11 months to 13 months is common). However, the downside is the potential interest you could forfeit. Some of the top-earning no-penalty CDs earn around 4.5% APY right now. But if you value the opportunity to lock in your rate and still maintain flexibility, this could be a good option.

The bottom line

If you're looking for the best place to deposit your existing savings balance, make sure you consider a one-year CD in today's high rate environment. Not only do these CDs offer some of the highest APYs, but they also carry fixed interest, keep your money safe and, for savers unsure about CD penalties, can be more flexible than longer CD terms. Just make sure to always review the terms and account details of any new account before you open. Start your search today and compare top rates from CDs available now!

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