Have CD rates bounced back yet?

CD rates are currently climbing little by little. Rising by .02 percent here and there, they are definitely going up rather than down and do exceed 2008 rates.

It is impossible to predict when they will be back to pre-2000 levels when 5-year CDs could pay between 5.5 and 7.6 percent. It is even possible that we will never see those kinds of numbers again.

If you are concerned about getting locked in to a low CD rate while the rates outside your own CD start to climb more aggressively, then your best bet is to simply avoid long-term CDs.

Instead, opt for short 3, 6 or 12-month CD terms. While you will not get the higher rate that you might in a 5 year CD with a shorter term CD, you will have your money free of obligation and penalty sooner so that you can roll it into a higher paying product.

You can also ladder your CDs so that you have many different CDs, all with a different term so that some of your money earns interest on higher rates, and some on lower. This can give you both higher interest and more flexibility.

Banking tips: This tip was originally posted on 11-15-2010 at 10:03 am.

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