The Federal Reserve has been cutting short-term interest rates and may continue to do so. As a result, yields on money market funds are coming down and probably will fall further. The same is true for bank CDs, when it’s time for renewal.
Therefore, if you hold bank CDs, shopping around can pay off. Web sites such as www.bankrate.com can help you lock in decent yields while they’re still available.
* Average yields on CDs are now in the 3 percent-3.5 percent range. That’s true for six-month, one-year, and five-year CDs.
* You still can get nearly 4 percent, if you are willing to lock up your money for five years.
* Another plan is to ladder CDs. Put some money into a one-year CD, some into a two-year CD, etc., out to five years. This lets you lock up current rates. If rates rise eventually, you’ll have a CD maturing every year, so you can reinvest and get the higher yield.