A 12-month CD is a certificate of deposit that offers a fixed interest rate for a period of one year. These accounts are popular among consumers because they offer a higher yield than a savings account while also providing the security of FDIC insurance. In this guide, we will discuss some of the benefits that come with opening a 12-month CD account.
What Is A 12-Month Certificate Of Deposit?
A 12-month CD is a certificate of deposit that offers a fixed interest rate for a period of one year. After one year, the account will mature, and the funds can be withdrawn without penalty.
These accounts are popular among consumers because they offer a higher yield than a savings account while also providing the security of FDIC insurance.
Earn The Highest Interest Rates On Savings Today
Fixed annuities are almost identical to Certificates of Deposit (CDs) accounts and provide higher interest rates and penalty-free withdrawals for income.
| Term | Insurance Company | APY |
|---|---|---|
| N/A | Money Market Account – Optimum Bank | 5.26% |
| N/A | Money Market Account – FVC Bank | 5.26% |
| N/A | Savings Account – CloudBank 24/7 | 5.26% |
| 12 Months | Bread Savings CD | 5.50% |
| 48 Months | Clear Spring Fixed Annuity | 5.15% |
| 5 Years | Athene Fixed Annuity | 5.30% |
| 10 Years | Equitrust Fixed Annuity | 6.00% |
Disclaimer: This is a review. The Annuity Expert is not associated with a bank or credit union. However, fixed annuities are sold at most financial institutions. We aim to help you find the highest interest rates for your retirement savings. We may receive a small referral fee if you purchase something using a link in this guide.
Benefits of a 12-Month CD
One of the primary benefits of a 12-month CD is its higher interest rate. A 12-month CD will typically offer a much higher yield than a savings account. This can help you earn more money on your deposited funds over time.
Additionally, 12-month CDs are a safe investment because they are FDIC-insured. This means that your deposited funds will be protected in case of a bank failure.
What Are The Drawbacks?
As with any investment, there are some potential drawbacks to consider before opening a 12-month CD.
One of the biggest potential drawbacks is that you may incur a penalty if you need to withdraw your money before the end of the term.
Early withdrawal penalties can vary depending on the bank but typically range from six months to one year of interest. Therefore, if you need to access your funds early, you may lose out on some of the interest you earned.
Compare Rates
When considering a 12-month CD, comparing rates from multiple banks is important. Rates can vary significantly from one financial institution to another. By shopping around, you can ensure you get the best possible rate on your 12-month CD.
The Next Steps
Opening a 12-month CD is a great way to earn more money on your deposited funds. These accounts offer a higher interest rate than savings accounts and are FDIC-insured, making them a safe investment option. Compare rates from multiple banks before opening a 12-month CD to get the best possible rate.