Get Your CDs While the Going's Not That Bad

CD interest rates are still higher than most other short-term, low-risk options available to consumers.
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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


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) - Get Report

. 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


(WB) - Get Report


For rates offered near you, check out'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.

Choose the right duration:

Rates increase as the term of the CD increases. And while the higher rates are nice, bear in mind that your cash will be locked up for the CD's term, whether three months or five years. Therefore, choosing the right CD includes considering when you'll need that money.

For instance, if you are planning on buying a car next summer, consider stashing your cash in a six-month CD. Alternatively, if you are saving up for a big vacation in a few years time, consider buying a three-year CD (such as the 2.75% 36-month CD offered by TD Banknorth in Massachusetts).

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This article was written by a staff member of