Get Your CDs While the Going's Not That Bad

Banks entice consumers to deposit more money by boosting the yields on the certificates of deposit (CDs) they offer. But the 0.75 percentage point cut by the Federal Reserve will undoubtedly limit how high banks are willing to go with the yields they offer. CD rates have fallen steadily since the economy took a downturn this fall.

Despite this drop, CD interest rates are still higher than most other short-term, low-risk options available to consumers. Currently, six-month CDs pay a national average of 1.87%, compared to 0.38% on savings accounts and 0.82% on money market accounts, according to data from BankingMyWay.com/.

If you're ready to check out CDs, here are some tips to finding the best deals -- and making sure your money is safe.

Shop around: To find the best CD rates, make sure you comparison shop. There is a good deal of variability between institutions because banks set their own rates. For instance, rates on six-month CDs in New York range from as high as 4.0% at the Hudson Valley Credit Union to a 2.1% offer from Bank of America (BAC). And while nationwide rates on one-year CDs currently average 2.24%, rates in California range from as high as 7% from the Central State Credit Union to a 3.6% offer from Wachovia (WB).

For rates offered near you, check out BankingMyWay.com's CD section and enter your ZIP code. Also consider CDs from online banks, which frequently offer higher rates than traditional brick-and-mortar banks because of their lower overhead. And be sure to take a look at the details of the CD offer -- a higher minimum balance is sometimes required to qualify for the advertised rate.