12-month certificates of deposit
12-Month CDs: What to Know Before You Choose
The one-year CD is one of the most widely offered terms in the US, which makes it a useful benchmark when comparing banks and credit unions.
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Why the 1-year CD is a benchmark
Because nearly every bank and credit union offers a 12-month CD, it's an easy way to compare institutions on a like-for-like basis. Compare the APY, the minimum deposit, and the penalty for withdrawing early.
Taxes on CD interest
Interest from a CD held in a regular taxable account is generally taxable as ordinary income in the year it's credited, even if you don't withdraw it. Banks typically report interest of $10 or more on Form 1099-INT. Holding a CD inside an IRA changes the tax treatment — consider speaking with a tax professional.
Using 12-month CDs for reserves
Some savers keep a few months of expenses in an accessible savings account and place additional reserves in a 1-year CD. This can help separate everyday cash from money you're less likely to need soon.
May suit savers who…
- Want a simple one-year commitment
- Are comparing institutions on a common term
- Hold reserves beyond everyday emergency cash
Things to check
- Penalty — commonly around three months' interest, but varies
- Whether interest compounds daily, monthly or at maturity
- Automatic renewal and grace period
12-month CD questions
Rates, minimums and penalties are set by each provider and can change at any time. CDRateWise does not display unverified rates. FDIC insurance applies to eligible deposits at FDIC-insured banks up to applicable limits. This page is general information, not financial advice.
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