How to Find High-Yield CD Rates

You have to look hard, but appealing rates are still available.

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Despite the reports that the recession has been vanquished, people are still concerned with where they're putting their savings. Combined with the reports of state and local governments defaulting on municipal bonds (rare, but think about the last year) have really taken those off the table for the most conservative of investors, so that really only leaves old reliable - the certificate of deposit.

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CDs don't carry principal risk, unless you count early withdrawal penalties, and so are very appealing to those who have been burned by the markets or other investments. They are FDIC-insured, have a fixed interest rate, and provide the certainty and stability many people crave right now. Not all CDs are created equal, some yield much higher than others and today we'll figure out how to find those higher yielding CDs.

Check CD Rate Tables

We have CD rates tables, powered by Bankrate's top notch team of researchers, and I think that should be the first stop anytime you are searching for high yield CD rates. You might be able to find a rate that tops the ones on the table but by checking the table, you can at least get a good understanding of what the rates need to beat.

For example, if you check the table now, you'll see the top rates are around 1.50 percent APY for a one year certificate of deposit. You might not want to open an account at one of the banks listed but now you know that 1.50 percent APY is the number to beat (or at least get close to) when you do opt for a one year CD.

In general, online banks with their lower overhead (no branches, no tellers, smaller infrastructure) will offer better interest rates. They also offer high interest savings accounts so your money has a place to live in between CDs.

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Check Your Current Bank

Now that you know what you can get for the maturity CD you want, it's time to see what your current bank is willing to offer. If your bank can give you a rate that is competitive with the ones on the list, there's value in working with a bank that you already have an existing relationship with. Sometimes, but not often, banks will negotiate rates if you bring in competing offers. By using the same bank, you can avoid applying and then maintaining yet another bank account.

Check Local Credit Unions

If you are eligible to join a local community bank or credit union, look at those rates as well. Smaller banks and credit unions will often have higher interest rates for their deposit accounts, which include certificates of deposit. Credit unions can offer higher rates because they are responsible to their shareholders, who by definition are the account holders. The big national banks need to generate profits for their shareholders, which are usually institution investors, which is why their rates are lower. Credit unions' profits are put back into the CU and depositors are the beneficiary (which is why credit unions kick ass).

Another side benefit of this is that loans at credit unions have lower interest rates so it's valuable to start a relationship with one even if you don't need a loan. One day, when you want to buy a house or a car, that relationship may prove fruitful in lowering your monthly costs.

Jim Wang writes about personal finance at When he's not tackling money issues, he's usually looking forward to his next vacation and writing about it at Wanderlust Journey.