A very common deposit account product that is used by the public is the certificate of deposit. A certificate of deposit also brings with it FDIC insurance of up to $250,000.00 at this point. Cd’s are generally seen as an attractive option for those who wish to put their money away and earn a yield higher than a savings account. It is important to remember that you should only deposit as much in a cd as you believe you won’t need for that time period, because there are penalties for early withdrawals.

Currently cd rates are extremely low because the Federal Reserve has the Fed Funds rate at virtually zero. The average one year cd is yielding a little less than 1.75% right now. This is definitely not an attractive deposit option with that kind of yield, but considering the health of the overall economy in the past year it isn’t surprising at all that rates are so low. When the Federal Reserve has set interest rates this low there is no way banks can afford to pay the impressive 4 or 5% one year cd rates we were used to seeing before. Even a five year cd, which locks up your money for a very long time only yields on average 2.93% according to Bankrate.com.

A question that many people have during this kind of economic environment is how long should I lock up my cd rate? The two options at this point appear to be either lock in a very long term cd after your compare cd rates at local banks and online. Even if you find the best cd rate out there for a long-term cd it won’t be very impressive at all. The other option is to use money market savings account specials or short-term cd rate specials and hope for better rates in the future.

Should you lock in cd rates now or wait for better rates in the future? The truth is it depends on your outlook on the economy. If you think the economy should improve drastically in the next several months you’ll want to stick to short-term options and wait for better rates. The definite thing about today’s rate environment is that things aren’t pretty, but they also can’t get much worse. The fact that rates can’t get much worse makes me wonder if it really is a wise move to lock up money for long periods of time.

Getting a good return on deposit options such as certificates of deposits is next to impossible now, but as a wise investor of your money you must do everything you can to maximize your results, even if they are smaller than what you would hope for them to be. I wanted to give the average individual some guidance on ways to find the best CD rates available to you.

Five ways to find the best cd rates

1. Check Bankrate.com for the best CD rates locally- This is a good place to start your search. The lists that Bankrate provides are less exhaustive in that they sometimes don’t include the smallest of banks, but it’s a good place to begin and get a baseline for normal rates.
2. Call Around to all the Local Banks- This is a must for all who want to get the best CD rate. Banks don’t always advertise the very best of their cd rates, so you need to call around and ask for the very best they have. Be proactive to get the highest yield possible.  
3. Look for odd numbered months and rate specials- The banks know that most people who come in will simply ask for a common time period such as one year or six months, so they will almost never make their rate specials on those common time periods. You’ll often find  the best cd rate specials for periods such as 7 months, 13 months, etc.
4. Pay attention to the economy- Why do you need to pay attention to the economy? If you know the economy is starting to head down, it’s a good time to lock in interest rates for a long time. If the economy is beginning to head up and the Fed is set to raise rates, settle for very short-term rates.
5. Consider non-traditional banks- Online banks, insurance company banks, and other non-traditional banks often have the best cd rates. If you are willing to open up and look in these areas you’ll probably find a better high yielding cd than you will at your local bank.

CD rates will fluctuate over the years, but as a wise investor you must use these tips to find the best one in every single environment. Be proactive and earn that money over time.