Best national 1-year CD rates pay 1.31%

piggy bank in glasses

In the year since the Federal Reserve's historic interest rate hike, the top 1-year CD rates have bobbed up. They've bobbed down. And today the lead sits almost exactly where it was last December.

A few of the major CD terms we track have actually lost ground since the Fed's move, and for a while, that was true for 12-month yields as well.

So keeping pace with the top pre-Fed return is the most we can celebrate.

As is usually the case, several credit unions and community banks are offering better-paying local and regional deals, some as much as 2%. There's even one promotion we'll share that pays a remarkable 5% to certain lucky savers.

Fortunately, a second Fed hike could be right around the corner. What that might mean for banks' rate sheets is a crystal-ball question, but we'll tell you what's on the Fed horizon.

The top national deals

Today's top yield among nationally available 12-month bank certificates is 1.31% APY, up by the tiniest possible margin from last December's 1.30% APY.

It's a disappointment after the term topped up to 1.36% APY from March to May, which was a high-water mark for national 1-year CDs over the last five years.

Still, it helps to remember that, after plunging in the spring of 2011, the leading 12-month yield wavered between its post-recession low of 1.05% and 1.10% APY for all of 2012 and half of 2013.

1-year cd rates

The leading bank offering 1.31% APY is VirtualBank, with a $10,000 minimum investment.

Operating solely online, VirtualBank is an FDIC-insured division of Miami-based Sabadell United Bank, which operates two dozen branches throughout Florida and is owned by Banco Sabadell, Spain's fifth-largest bank.

TOP 12-MONTH CD RATES: Nationally Available Bank Deals

Bank APY Minimum Deposit
VirtualBank 1.31% $10,000
Bank of Baroda 1.30% $1,000
Live Oak Bank 1.30% $2,500
BAC Florida Bank 1.29% $1,500
State Bank of India-Chicago 1.29% $2,500
State Bank of India-New York 1.29% $5,000
Popular Direct 1.28% $10,000
Pacific National Bank 1.27% $1,000
Capital One 1.25% No minimum
TAB Bank 1.25% $1,000
Synchrony Bank 1.25% $2,000
Sallie Mae Bank 1.25% $2,500
Colorado Federal Savings Bank 1.25% $5,000

Earning more with local deals

As is often the case, savers can find better 1-year returns by turning to credit unions and community banks.

Indeed, we've found more than a dozen offers that beat the national leaders, including four that are even available nationwide.

But for those who live in the right place or work for the right employer, it's possible to make as much as 2%, or even 5% in one lucky region.

On all of the deals below, eligibility requirements apply. Contact the bank or credit union directly to determine if you qualify for membership.

TOP REGIONAL 1-YEAR CDS: Credit Unions & Community Banks

Bank States Term (in months) APY
Leaders Credit Union Tennessee 12 5.00%
Financial Health Federal Credit Union Indiana 12 2.00%
Peoples Transport Federal Credit Union New Jersey 12 1.94%
Consumers Credit Union Nationwide 16 1.60%
USAlliance Financial Credit Union Nationwide 15 1.51%
Idaho Central Credit Union Idaho, Nevada 12 1.50%
Village Credit Union Iowa 13 1.50%
Veridian Credit Union Nationwide 15 1.50%
First Republic Bank California, New York, Florida, Massachusetts, Connecticut, Oregon 17 1.50%
Texas Exchange Bank Texas 12 1.36-1.46%
Michigan One Community Credit Union Michigan 18 1.46%
Pentagon Federal Credit Union Nationwide 12 1.36%
Bank 21 Missouri 14 1.35%
Synergy Bank Texas 10 1.20%

If you qualify, these deals are worth your effort because they pay at least four times more than the current national 12-month average of 0.31% APY, according to our weekly nationwide survey of banks and thrifts.

Watching for a Fed impact

Average 1-year CD rates had fallen as low as 0.22% APY and still sat there in January 2014. Improvements have been slow, finally pushing to 0.31% APY in September.

Of course, all of these rates are a far cry from the 12-month average of 3.78% APY we saw in February 2007 — before reckless mortgage lending plunged us into the Great Recession.

The dramatic descent in rates is a result of the Federal Reserve aiming to stave off a complete financial collapse by dropping interest rates to about zero in December 2008 — and keeping them anchored there for seven years.

That dismal period ended one year ago, with the Fed's rate-setting committee approving what was expected to be the first of several small increases in the federal funds rate.

But global stability concerns and the struggle for inflation to reach a healthy level gave the Fed pause on making further hikes, with no increases implemented in 2016 so far.

Finally, it's expected savers are in for some good new from the Fed's meeting next week, with the vast majority of economists and Wall Street forecasters expecting the Fed to announce a hike on Wednesday.

If that happens, let's hope it translates into higher bank returns by the time a 1-year CD bought now matures next winter.

Disclaimer: The rates above were verified Dec. 5, 2016. Credit unions and banks should be contacted directly to determine eligibility for opening accounts with that institution, as well as to verify current rates.

  • MikeinDenver

    Many of these rates are out dated at least for the 12mo CDs.