How to Play $1K: Sweet CDs

The biggest myth about credit unions is that few can qualify unless they have a certain job, ethnicity or location. But the fact is, most of the population is eligible for one credit union or another. "Plus, with shared branching...you're not limited to your local ATM," says Penrod. The nationwide credit union co-op network includes 25,000 branches.

Next, consider online banks, which can pass on their savings from little overhead to consumers in the form of better interest rates. At ING CD deposits rose by 25% in the first quarter of 2008 compared to the year-ago period. The number of new CD accounts also jumped by 21%. "ING has no brick and mortar branches. It's a high overhead savings that we enjoy passing back to the customers," says Cathy MacFarlane, head of corporate relations for ING DIRECT USA.

Haggle and 'Ladder'

Don't limit your search for a smart CD account to online banks and credit unions. Remember that traditional banks are currently in dire need of liquidity and simply asking for a better rate can sometimes do the trick. "A lot of times banks will have an advertised rate, but that's not their best rate. You can negotiate...make a counter offer," says Leggett, especially if you're an existing customer in good standing or a potential new customer.

Finally, consider "laddering" your CD investments, whereby you place your money in different CDs with various maturity structures. This can maximize your CD rates, as reported earlier by TheStreet.com's Lauren Tara LaCapra. How? When the CD with the shortest maturity expires, have it roll over into the CD with a longer maturity (and likely, a higher yield).

Legget suggests laddering in thirds over a 6-month, 12-month and 18-month CD.

Ways to Play $1K

So what would you do with a cool grand?

From investment and savings vehicles to tax-friendly donations, I will explore various opportunities to put a thousand bucks (or less) to smart (and sometimes fun) use.

Please email me your suggestions at [e-mail].

To hear more from Torabi, check out "Open Book: How to Be 'So Money'" on TheStreet.com. Plus, to research CDs and other bank products, visit BankingMyWay.com.