Best 1-Year CD Rates: 4% or Higher for July 2025
Quick Answer
The best 1-year CD rates are 4% or higher, as of July 2025. Every financial institution is different, so it’s wise to shop around and compare rates. Online banks tend to offer the highest APYs.
Certificates of deposit, or CDs for short, typically offer higher interest rates than high-yield savings accounts. That can allow your money to work a little harder for you—as long as you're willing to tie up your funds for a period of time. As of July 2025, the best one-year CD rates were 4% or higher. That far surpassed the national average rate, which was 2.50%, according to Curinos data.
Getting a feel for current CD rate trends can help you decide if it's the best place to put your money. You'll also want to weigh the pros and cons before opening an account.
1-Year CD Rate Trends
Average one-year CD rates tend to fluctuate, but these annual percentage yields (APYs) are just averages—it's possible to find CDs that offer higher rates, especially if you explore credit unions and online banks.
How much interest you'll earn with a CD is largely influenced by the federal funds rate. This benchmark rate, which is set by the Federal Reserve, is the rate financial institutions use to lend and borrow money between each other. When this rate moves up or down, CD rates, savings account APYs and APRs on loans and credit cards typically do the same.
Average 1-Year CD
Learn more: Best CD Rates
How Much Can You Earn With a 1-Year CD?
The amount you can earn with a one-year CD will depend on the interest rate and how much you're putting into the account. If you deposit $10,000 into a one-year CD with a competitive rate of 4%, you could earn $400 in interest.
| Initial Deposit Amount | Average Rate of 2.50%* | Competitive Rate of 4.00% |
|---|---|---|
| $1,000 | $25 | $40 |
| $10,000 | $250 | $400 |
| $100,000 | $2,500 | $4,000 |
*Source: Curinos LLC, July 2025
How to Find the Best 1-Year CD
If a one-year CD sounds like a good option and you have your deposit ready, you can begin looking for an account provider. Here are some general steps for finding the best CD:
- Decide which kind of CD makes the most sense. There are several types of CDs to choose from. Step-up CDs and bump-up CDs both allow for potential rate increases during your one-year term, though your initial rate may not be as high as a traditional CD. You might land a higher APY with a brokered CD, but these may be callable. That means the issuing financial institution could end the CD before it matures.
- Compare CD providers. Shop around and compare rates, terms, penalties and minimum deposit requirements from multiple banks, credit unions and brokerage firms. You'll likely find that online banks tend to offer the most competitive rates. Online comparison tools can make it easier to find the right CD, but be sure to include local banks and credit unions in your search.
Is Now a Good Time to Get a 1-Year CD?
The goal of opening a CD is to earn the best return possible. Again, APYs on CDs generally move in the same direction as the federal funds rate. When this rate is on the rise, you'll likely see a spike in CD rates.
No one knows for certain how rates will change going forward, but some policymakers anticipate two rate cuts by the end of 2025. If CD rates follow these rate changes, now could be a good time to lock in a competitive one-year rate before things potentially change.
Pros and Cons of 1-Year CDs
Just like any other low-risk investment, CDs have their benefits and drawbacks. Below are some key things to consider before opening this type of account.
Pros
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Your rate of return is guaranteed. With a CD, you'll know the rate you're getting from the outset. This means you can count on that earned interest, assuming you don't make an early withdrawal. The only exception would be if you have a callable CD that's terminated ahead of schedule.
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You only have to part with your money for one year. Some CDs have terms as long as 10 years. That's a long time to leave your money in the account, which is an important detail since tapping your funds early usually results in an early withdrawal penalty.
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APYs are typically higher than a savings account. CD rates fluctuate depending on the financial institution and current interest rate trends, but you can expect to earn more than you would with a savings account.
Cons
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You might find a better rate with a longer-term CD. A higher APY could translate to a significantly higher return if you're making a large deposit. The trade-off is that you'll give up access to your money for a longer stretch.
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There's usually an early withdrawal fee. That could cost you anywhere from 90 to 180 days' worth of interest. This is why it isn't wise to keep your emergency fund in a CD. A high-yield savings account will likely offer a slightly lower rate but more accessibility.
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You could miss out on better returns. If rates increase after you've already opened a one-year CD, you may not have additional cash on hand to open another one. You might also secure better long-term returns with investments that carry more risk.
Alternatives to 1-Year CDs
When all is said and done, you might decide that a one-year CD isn't the best option. Here are some alternatives that may be a better fit:
- A CD with a different term length: CDs are commonly available in terms as short as three months or as long as five or 10 years. A CD with a different term length may be more compatible with your financial situation.
- A high-yield savings account: If liquidity is important to you, a high-yield savings account could be a great option. You can access your money as needed, though you might pay a fee if you make more than six electronic transfers or withdrawals per month.
- A money market account: Your money will earn interest with a money market account, and it's easier to withdraw funds when compared to a CD. However, yields may be lower. There might also be a minimum balance requirement
Learn more: Check out the best high-yield savings accounts and best money market accounts.
Frequently Asked Questions
The Bottom Line
Rates on one-year CDs vary from one financial institution to the next. Overall interest rate trends also play a role. CD rates can vary by institution, but it's currently possible to find rates that exceed 4%. Just be aware that you'll likely be penalized if you withdraw money before your CD matures.
Grow your money safely with a CD
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About the author
Marianne Hayes
Marianne Hayes is a longtime freelance writer who's been covering personal finance for nearly a decade. She specializes in everything from debt management and budgeting to investing and saving. Marianne has written for CNBC, Redbook, Cosmopolitan, Good Housekeeping and more.
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