How to Play $1K: Sweet CDs

Editor's note: Not drowning in debt? Have $1,000 to put to work? TheStreet.com senior correspondent and You're So Money author Farnoosh Torabi looks at certificates of deposit (CDs).

With all the eye-rolling over how there's no point in putting money in a short-term savings vehicle -- with the Fed slashing interest rates and all -- I wonder how my 12-month "Orange" CD from INGdirect.com (ING) is earning an impressive 4.7%.

Granted, I opened the account back in January, when rates were a tad higher. But what if I were to open a new CD at ING now?

Relative to some other bank CD offerings, it would carry a still-competitive yield of 3.3%. The current nationwide average rate of return of CDs is 3.03%, according to Bankrate. And average minimum deposits are about $1,000. Perfect!

Sure, 3.3% is far from the yield one might get from a high-flying stock or other more aggressive investment. But a CD offers more security and a fixed rate of return.

Stability in Volatile Times

I guess I've been feeling a bit conservative lately. But with so much volatility in the financial markets these days, it's nice to know that at least some of my money is pad-locked safe in an interest-bearing account and insured -- up to $100,000 by the Federal Deposit Insurance Corporation (FDIC).

CD Rates Make a Comeback

"[A CD] gives consumers peace of mind during uncertain economic times," says Tracey Mills of the Consumer Bankers Association. Plus, with just $1,000, what stocks could I really afford to buy where I'd have enough diversification? The names I like right now -- Apple (AAPL), Research In Motion (RIMM) and First Solar (FSLR) -- are all trading in triple digits.

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