Buying Short Term CDs Doesn't Seem So Wise at the Moment

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Short term CD rates are falling as the Federal Reserve holds the overnight Fed Funds rate close to zero.

Short-term CDs just aren’t attractive at the moment.  The 10-year Treasury is now pushing 4% - changing the entire yield curve.  While the Fed may try desperately to hold rates low, but the reality is that inflation is a real threat at the moment.  If we do see inflation, savings and money market rates will quickly go up.  Since savings rates are very close to, and in many cases – above, short term CD rates, they are your better bet.  There is a real risk of higher rates, and if they were to fall, they don’t have far to fall anyway.

See the best CD rates here.

Jason Rodgers
Jason Rodgers: Jason Rodgers was an experienced research analyst for a major bank prior to retiring to run his own investment consultancy in beautiful Lihue, Hawaii. Jason contributed articles to BestCashCow from 2008 to 2014.

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Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
Comenity Direct 1-Year 0.70% APY with $1,500 minimum
CFG Bank 1-Year 0.67% APY with $500 minimum
Primary Bank 1-Year 0.65% APY with $1,000 minimum
Comenity Direct 3-Year 0.85% APY with $1,500 minimum
First Internet Bank of Indiana 3-Year 0.81% APY with $1,000 minimum
Connexus 3-Year 0.75% APY with $5,000 minimum
Primary Bank 5-Year 1.15% APY with $1,000 minimum
Connexus 5-Year 1.00% APY with $5,000 minimum
First Internet Bank of Indiana 5-Year 0.96% APY with $1,000 minimum

See More Online CD Rates →


  • Sam Cass

    June 11, 2009

    What do you mean by short term? If I put something into a 1-year CD then I can always reinvest the money in 12 months once rates have risen.

    I would think the danger would be in longer-term CDs, where I'm locked in. As the analysis on this site shows, those rates have stabilize more than the shorter-term ones but that doesn't mean they aren't going to spike.

    A 12-month at 2.49% sure seems better than a 5-year CD at 3.80%.

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