Last updated: September 20, 2026 · Rates verified: August 14, 2026
Key takeaways
- The highest 12-month CD rate available as of August 14, 2026 was 4.50% APY, more than 20 times the national average of 0.20% APY.
- Online banks typically offer higher CD rates than traditional banks because they have lower operating costs.
- Always check the early withdrawal penalty before opening a CD — rates matter, but you need to know the cost if your situation changes.
Banks set CD rates based on what they pay to borrow money themselves and how aggressively they want to attract deposits. That competition creates significant differences in what you'll actually earn. As of August 14, 2026, the highest 12-month CD rate available was 4.50% APY, while the national average sat at just 0.20% APY — a gap of 4.30 percentage points.
That spread matters. On a $10,000 deposit held for a full year, the difference between the top rate and the national average would be roughly $430 in additional interest earned. This is why shopping across banks — rather than assuming your current bank offers competitive rates — can meaningfully improve your returns.
Top 12-Month CD Rates
| Bank/Provider | Rate |
|---|---|
| Popular Direct | 4.50% APY |
| United Fidelity Bank | 4.40% APY |
| E*TRADE | 4.35% APY |
| CFG Bank | 4.30% APY |
| Sallie Mae Bank | 4.25% APY |
Rates verified August 14, 2026
How 12-Month CDs Work
A certificate of deposit is a savings product where you agree to lock up your money for a fixed period — in this case, 12 months — in exchange for a guaranteed interest rate. You can't withdraw the funds early without paying a penalty (the amount varies by bank). At maturity, your principal and all earned interest become available to withdraw or reinvest.
The 12-month term strikes a practical balance for many savers. It's long enough that banks will pay meaningfully higher rates than savings accounts, but short enough that you're not tying up capital for years. If you need access to your money sooner, shorter-term CDs exist; if you can commit longer, you may find slightly higher rates on 18-month, 24-month, or longer terms depending on the current rate environment.
What to Consider Beyond the Rate
The headline interest rate is the most important factor, but a few other details matter when choosing where to open a 12-month CD.
- FDIC insurance: Make sure your bank carries FDIC insurance, which protects up to $250,000 per depositor per institution. This is a baseline safety feature most banks offer, but it's worth confirming before depositing.
- Penalty for early withdrawal: Banks vary in how much they charge if you need your money before the 12 months end. Some charge the equivalent of a few months' interest; others may charge more. If there's any chance you'll need the funds early, ask about the penalty before committing.
- Type of institution: Online banks, which have lower overhead, typically offer higher rates than brick-and-mortar branches. Credit unions sometimes offer competitive rates as well. You don't need a checking account with a bank to open a CD there.
12-Month CD vs. Other Options
A 12-month CD makes sense if you have cash you won't need for a year and want a guaranteed, fixed return with no market risk. If you might need the money sooner, a high-yield savings account sacrifices some interest (rates are typically lower) but gives you access without penalties. If you're comfortable with market volatility and have a longer time horizon, stocks or bonds might offer better long-term growth potential — but CDs carry no investment risk.
Frequently asked questions
Can I withdraw money from a 12-month CD early?+
How is CD interest taxed?+
Is my money safe in a CD?+
Should I ladder CDs or buy just one?+
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