Looking For Higher Yields? Check Out the Latest CD Rates
Certificates of deposit are usually seen as safe, low-yield investments. But these days, CDs are getting a second look from consumers. Many are looking for something that offers a steady yield, while allowing them to take some cash out of the stock market.
In fact, annual yields on certificates of deposit are creeping up at banks nationwide, prompting several analysts to say that CDs may now be an especially attractive alternative to cash for investors.
Some banks have been dangling deposit rates as high as Wachovia's 4.25 percent on a one-year CD – and Countrywide's 5 percent on a five-year CD. That’s compared with last month’s national averages of 3.60 percent and 4.16 percent, respectively, according to Bankrate.com.
The big question is: Will CD rates will outpace inflation?
In the current investment environment, with the Fed holding interest rates steady at 2 percent, they are beating it. But because of uncertainty over the long term, short-term CDs – with maturities between three months and up to a year – tend to be more attractive.
The FDIC says the year term tends to be popular, but the preference really depends on how much money consumers may have.
Laddered CDs are an option gaining traction with wealthier investors. Laddering involves spreading your total deposit across multiple CDs with rolling maturity dates, customizable interest and cash distributions.
– By Ed Coury, Senior Editor and Midwest Bureau Chief for the Wall Street Journal Radio Network, Dow Jones & Co., and a reporter for WWJ Newsradio 950.
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