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Here Are Your Best CD Strategies as Rates Rise

NEW YORK (TheStreet) -- Interest rates on the 10-year U.S. Treasury note have soared above 2.8% after hitting a low of less than 2% in the spring, symbolizing a rate trend many expect to continue. So, finally, it's a good time to put money into interest-bearing products such as certificates of deposit, right?

Well, maybe, but not to earn interest. CD rates remain pitifully low, ranging from 0.083% for the three-month CD to 0.756% for the five-year product. That means a five-year CD with $100,000 on deposit would pay just $756 a year, and the three-month CD just $83.

With inflation running around 2%, you'd be losing money on CD savings.

And if you tied your money up for five years to get the higher yield, you'd be riddled with regret if newer CDs were more generous in a year or two. That's quite possible.

There's still a case to be made for bank savings -- quite a strong one, in fact. That's the benefit of FDIC insurance. You won't earn much in interest, but you won't lose money, either, except to inflation.

Other alternatives, such as stocks, even if they pay healthy dividends, all come with the risk of loss. You could beat the CD rates with a corporate bond or a mutual fund containing them and be able to get your money out with the click of a mouse. But corporate bonds lose value if interest rates rise and newer bonds are more generous. And with corporates, bond prices are also affected by the company's health. If it starts to look shaky, bond prices will fall because investors worry they won't get paid.

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