How to find the best rates on CD's - Certificates of Deposit

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By offgrid
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Looking to find the best rates on Certificates of Deposit ? There are a lot of resources online but there are 2 that we always go back to.

Difficulty: Easy

Instructions

Things You'll Need:

internet connection

Step 1

With the Fed Funds rate at 0 % who is paying Interest these days? Well, actually the banks. But you want to make sure it's not a "Bad Bank" that they'll be around in 5 years when you're ready to redeem your CD. One place we check in on is Bankrate.com As of today they are showing 5 year Certificates of Deposit as high as 2.78 %. That's not much, but it is better than watching your investment shrink by 10 % every day.
Step 2

I know with earning small amounts of interest the "experts" always say that if you are only earning 2.78 % on CD's and inflation is at 2.78 % you are earning nothing. Well what about if we are experiencing deflation ? Do you add that % on to your CD rate ? These experts are usually the ones trying to convince you to buy their Mutual Funds that have a maintenance fee of 3-4% whether the Market is up or down.
Step 3

It is always a good idea to have some savings in "FDIC insured Certificates of Deposit." If the rates are really low you can buy several at different durations, 1 yr, 2 yr, 3 yr. 4 yr, 5 yr .... so that you always have some coming due to reinvest in case interest rates start to move back up. Or you can always buy a 5 yr CD every year so that in 5 years you will have a new one coming due every year. Eventually Interest rates will go back up and you will be getting a better rate of return.
Step 4

The second place we check is Ameritrade.com (see Link in Resources below) They are currently showing a 2 year CD earning 2.77 % If you are thinking that interest rates will start to head back up in 2011 this is a good option.