Why 12 Months Is the Benchmark CD
The 1-year CD is the most widely held CD term, and for good reason: it's long enough to earn a real rate premium over savings accounts, short enough that your money never feels trapped, and it's the term banks quote when they advertise. When people compare "CD rates," they usually mean this one.
What Can You Earn in 12 Months?
The math is beautifully simple at exactly one year: interest = deposit × APY. A $10,000 deposit at 4.50% APY earns exactly $450; $25,000 earns $1,125; $100,000 earns $4,500. No exponents needed — though the calculator above handles any amount instantly.
1-Year CD Strategies
- The annual roll: many savers simply renew a 1-year CD each year at the best rate they can find — low effort, always near the top of the market.
- Ladder foundation: every classic CD ladder starts with a 1-year rung — see the full strategy in our CD Ladder Calculator.
- Rate uncertainty hedge: can't decide between locking long or staying liquid? Twelve months is the compromise that rarely feels wrong in hindsight.
Fine Print to Check
Typical early withdrawal penalties on 1-year CDs run 3 to 6 months of interest — check yours with our Early Withdrawal Penalty Calculator. And at maturity you usually get a 7–10 day grace period; miss it, and the bank auto-renews you at whatever its current 1-year rate happens to be.