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4/23/2019

Why You Should Choose a 1-Year CD

A lot can happen in a year. Interest rates can dip, the stock market can fluctuate. If you have money you’re ready to put away for this amount of time, a 1-year certificate of deposit (CD) just might be the perfect place to keep your savings safe and growing.

What is a CD?

A Certificate of Deposit (CD) is a savings product known as a time deposit account. When you open a CD, you invest a fixed amount of funds for a specific time period (your term). In return, you earn an interest rate that is typically higher than a traditional savings or money market account. Your interest rate is locked in for the term and you will be unable to access your money penalty-free until the CD's maturity date. CIT Bank offers CDs with terms ranging from 6 months to 5 years. A 1-year CD is a 12-month investment.

What happens if the 1-year CD rate changes?

Earnings on a 1-year CD are predictable. If interest rates decrease during the term of your CD, your rate is locked in and will not change.

What happens at maturity?

Once your CD matures, you have the option of rolling it over to another CD for the same term or a different term. Or you can cash it out.

What are some of the disadvantages of a 1-year CD?

While a 1-year CD can be a smart choice for reaching your financial goals, there are some drawbacks to keep in mind:

  • CDs are not liquid and accessing funds before the CD's maturity date will result in penalties.
  • Interest rates could increase during the term of your CD.

When is a 1-year CD right for you?

A 1-year CD could be a great option for you if:

  • You won't need access to your money for one year.
  • You’d like to earn a higher interest rate than some savings or money market accounts.
  • You want a safe, FDIC-insured investment protected from market fluctuations.
  • You’re saving money for something special that is at least a year away, like a vacation, car or some home improvements.
  • You want to park your money in a place where you won't be tempted to spend it.

How to choose the best 1-year CD account

It’s difficult to decide who you can trust with your money. When comparing your CD choices, look for a well-respected financial institution that offers:

  • A competitive 1-year CD rate
  • Low minimum deposit
  • No account opening or maintenance fees
  • Daily compounding interest
  • FDIC insurance
  • Excellent customer service

Enjoy savings growth and security

A 1-year CD provides a reliable return on your investment in just a short amount of time. You’ll have no need to worry if CD rates decrease. You can continue confidently on your journey toward your savings goals.

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