The FDIC pegs the national average 12-month CD rate at just 1.53% APY. Meanwhile, a handful of online banks are paying 3.50% APY right now on the same 1-year term. That’s more than double the average.
On a $10,000 deposit, the gap between those two rates is bigger than most people realize.
Here’s the math, and why shopping around for CD rates matters.
What $10,000 earns at 3.50% APY for 12 months
A 12-month CD at 3.50% APY is straightforward math. You deposit $10,000, leave it alone for a year, and the bank pays you a fixed return on top.
Here’s exactly what that looks like at maturity:
|
Starting Deposit |
APY |
Interest Earned |
Ending Balance |
|---|---|---|---|
|
$10,000 |
3.50% |
$350 |
$10,350 |
Data source: Author’s calculations.
That’s $350 in your pocket for doing nothing but parking the money and not touching it. For context, the national average 12-month CD rate is just 1.53% APY in May 2026 — so earning 3.50% is more than double what most banks are paying right now.
When a 12-month CD actually makes sense
A 1-year CD is a good choice when two things are true: you don’t need the money for a full year, and you want to lock in today’s rate before it potentially drops.
That second part is important. Rates have been slipping slowly in 2025 and 2026, and if the Fed cuts core interest rates later this year, savings APYs are likely to follow. A CD freezes your APY for the full term, so a 3.50% rate today will still be in place 11 months from now — even if savings accounts have fallen to sub 3.00%.
CDs also work well for money you’ve already earmarked for something specific. For example, a wedding next spring. Or a down payment in 18 months time. Locking up your cash isn’t a downside when you weren’t going to touch it anyway.
Keep in mind, most CDs charge an early withdrawal penalty of about three to six months of interest if you pull the money out early. So treat the term seriously before you commit.
When a high-yield savings account might be the better move
I’ll be honest — I don’t personally own any CDs right now. My high-yield savings account is paying nearly the same top rates, I can move the money whenever I want, and I don’t have a specific goal I’m saving toward in the next 12 months.
For a lot of people, that flexibility wins. Even though savings accounts are exposed to interest rate drops at any time, it might be worth making a little less interest to retain full access to your cash.
If you prefer that immediate access option, some of today’s best high yield savings accounts are paying upwards of 3.50% APY, or higher.
The bottom line
A 3.50% APY 12-month CD earns $350 on a $10,000 deposit — nearly $200 more than what the national average rate of 1.53% would earn. That gap is exactly why rate shopping matters before you commit your cash to any CD.
The difference between an average rate and a top rate isn’t pennies — it’s real money sitting on the table for anyone willing to spend 10 minutes comparing offers. See today’s top CD rates and find the best fit
