1 Year CD Rates

In the United States a one year CD or certificate of deposit is a 1 year (12 month) low risk investment and savings product provided by banks and thrifts for investors or customers. It typically offers a higher rate of interest than a regular savings account with banking institutions providing a variety of maturity range options such as 7 days to 10 years with 1 year maturity products commonly available.

The convention historically for a 1 Year US dollar local currency CD was calculated at 360, however more recently some retail banks offer their CDs at 365 days which is similar to the UK. Like other CD products, when a 1 year CD matures you receive your principal plus interest however if you redeem this product before it matures you may have to pay an "early withdrawal" penalty or forfeit some of the interest it has earned.

Where can you get 1 Year Certificate of Deposit Products?

One year CD products are available through banks, credit unions, thrifts as well as many brokerage firms who offer 'brokered CDs'. The interest options by these firms for these 1 year CDs may include interest payments at maturity, semi-annual or monthly with many offering daily compounding.

A 1 year certificate of deposit is covered under the FDIC with deposit insurance covered up to the applicable limit on a per customer and per institution basis. (More information at the FDIC.gov website).

How are Interest rates for 1 Year CD maturity determined?

Like other CD products, a one year CD interest rate is affected by various variables that a financial institution would use in their financial models determining the rate including the federal funds rate, regulation requirements, competition as well as liquidity and funding requirements. The most important factor is the federal funds rate set by the FOMC through its current and future policy expectations of inflation and forecasted interest rate movements. In particular the yields on a 1 year CD tend to exceed the treasury rate as well other short term federal instruments with the higher rate attributable to that the a CDs earnings are taxable while the Treasury bond interest is exempt from state and local income taxes.

When considering opening up a CD account it always important to consider the the real rate of return on a certificate of deposit after inflation is taken into account.

Highest Interest Rates on One Year / 12 month CD rates in the United States

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