The end of the year presents a good time for savers and investors to take stock of their financial position not only because it is a reflective period but because there are some very real financial deadlines associated with December 31. Missing them or not being aware of them could cost you a bundle. Here are a few things that every saver should do in the next couple of weeks, if you haven't done them already.

Estimate your tax burden

The Turbo Tax Taxcaster 2013 allows you to enter some rough calculations to get an estimate of how much you might have to pay or owe. It also shows how items like charitable giving might impact tax situation. Knowing how much you might owe or receive as a refund can help you plan out your next moves going into the next year.

Make any tax deductible gifts that you want.

The holiday season puts people in the mood of giving, which is why there are so many charitable solicitations arriving in the mail. Charitable contributions can be effective in lowering your tax bill, so if you are looking for any last-minute tax deductions, open your wallet or purse and give to your favorite causes.

Consider selling investments that have lost value.

If you need some extra losses to offset gains or income, and have some bad investments that aren't going up anytime soon, then consider selling them before year-end. This year, harvesting losses on can be an even more effective strategy for high-income individuals because of increases in the top income bracket and in long-term capital gains rates:

• The increase in the highest tax rate on long-term capital gains from 15% to 20%.
• A new 3.8% Medicare surcharge for high-income taxpayers that effectively pushes the highest tax on long-term capital gains to 23.8%.
• The increase in the top tax bracket to 39.6% from 35% for ordinary income, nonqualified dividends, and short-term capital gains. With the Medicare surtax the top rate can be as high as 43.4%.

This article from Fidelity has helpful information on tax harvesting strategies.

Use the money in your flexible spending accounts

Don't forget to use the money you have set aside in your flex spending accounts. Now is the time to get that cavity drilled or a new pair of eyeglasses if you have money left over. Any money left over at the end of the year is gone.

If you are over 70 1/2 take your minimum required distribution

If you are over 70 1/2 and have a qualified retirement account (IRA accounts, 401Ks, 457 plans, or other tax deferred plans) then you must start withdrawing money or you will be penalized heavily by the IRS. The amount that you withdraw is determined by an IRS table (view the worksheet here to calculate your required distribution). The penalty for not withdrawing the money is stiff, 50% on the amount that was not withdrawn on time.

Max out your 401K, Roth IRA, or other tax advantaged savings account

Tax deferred or tax free investment vehicles have annual contribution limits. For example, the annual 401K limit is $17,500 while the annual Roth IRA limit is $5,500 ($6,6500 if age 50 or older).  Depending on your employer's plan design, you might be able to make additional contributions to the plan to bring it up to the limit, or change your percent of salary steered towards your retirement account. Speak to your HR department to investigate this further.

Check to make sure your savings accounts are earning you the most income.

The end of the year is also a great time to review money held in savings accounts, CDs, and checking accounts to be sure you are earning the highest returns. The same is also true of fixed rate IRA CDs. BestCashCow lists the best rates on various bank accounts the site's Savings Booster Calculator shows how much extra money you can earn by moving your money to a higher paying account.

Taken together, these seven steps will help close out the year on a positive note and ensure that you haven't left any money on the table as you begin the new year.

Pentagon Federal Credit Union upped the rate on its 5 and 7 year CDs (called money market certificates by PenFed) to 3.04% APY, the first return to 3% in a long while for the 5 year term. That is by far the best 5 year CD rate (check table) with CIT Bank offering the next highest rate at 2.05% APY. The 3% rate is also available in a 7 year money market certificate. In general, I have been arguing against longer-term CDs because I believe that rates are on the rise and it doesn't make sense to lock-in for a long term at a lower rate. But 3.04% is pretty attractive and savers looking for a little extra yield may find this worthwhile. The average 5 year CD rate is 1.079% APY and the BestCashCow Savings Booster Calculator shows that moving money into the PenFed 5 year CD will result in an additional $8,255 in savings on $50,000 over a 10 year period.

Try calculating the extra money you would generate putting money into a PenFed CD.

Almost anyone can join PenFed. Membership is open to those serving in the military or veterans as well as those belonging to a qualifying organization. In general, anyone can become a member by joining one of the participating organizations for a nominal fee. Organizations open to all individuals include National Family and Military Association ($20 one-time fee) or Voices for America's Troops ($15 one-time fee). This is a two for one as you can join worthy organizations and also be eligible to become a PenFed member and take advantage of their competitive rates.

Share Certificates can be opened online, via phone or at a PenFed branch. 

Pentagon Federal Credit Union is the third largest credit union in the United States with over $15 billion in assets. All deposita re NCUA insured up to the limit of $250,000 per individual.

Thanks to Shorebreak for letting us know about this rate increase!

The rally that we saw in CD rates over the past four months appears to have pretty much exhausted itself. Short term and long term CD rates have remained flat over the past month. Online savings account averages have bumped up a bit as several banks have raised rates. The recent budget battles, botched health care roll-out, and signals from Fed Chairmwoman-to-be Janet Yellen that she plans to keep rates low have all contributed to squelching the mini rally we saw in the spring and summer.

From one month ago, 12 month average CD rates decreased by one basis point from 0.349 to 0.348% APY. Average 3 year CD rates dropped from 0.714 to .713% APY. Five year average CD rates remained flat at 1.079% APY. Online savings accounts averages moved from 0.664% to 0.685% APY.

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Keep track of deposit rates

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The chart below shows the trend in average rates since October 2012.

Top Rate Recap

During this period, top savings and CD rates stayed pretty much status quo.

• Online Savings: GE Capital Bank retains the top spot at 0.90% APY.
• 1 Year CD: GE Capital Bank has moved into the top spot with a 1.05% APY rate, replacing Nationwide Bank that had a 1.06% APY rate but with a $100,000 minimum balance.
• 3 Year CD: Pentagon Federal Credit Union has increased its rate to 2.02% APY, with the next closest rate being CIT Bank at 1.40% APY (thanks to Shorebreak for alerting us on the rate increase with PenFed).
• 5 Year CD: CIT Bank moves into the top spot with a 2.05% APY CD, replacing iGoBanking.com, which had a 2.05% APY rate also but has dropped its rate down to 1.65% APY.
• Rewards Checking: Hope Credit Union and Money One Federal Credit Union both have the top rewards checking rate of 3.01% APY for balances up to $10,000. Both credit unions are open to members from across the country.

It's possible to find even better rates at local banks and credit unions (especially for CDs). You can search for better local rates here.

Online Saving and CD Spread

The difference between average 1 year CD rates and average online savings rates spiked up over the last two weeks with the increase in online savings account averages. As the chart below shows, the difference between online savings accounts and CDs has remained relatively consistent over time. It's my opinion that online savings accounts represent the best place to park your cash at the moment, as they offer a high rate, relative rate stability, and liquidity should rates begin to rise in the future. Certificates of deposit just do not pay enough premium to justify keeping money locked in them.

General rate environment

The shutdown augered the start of a slow patch in the economy. That, combined with the botched healthcare rollout have stolen the headlines and taken some of the wind out of the sale of consumer confidence. Maybe someday, the government will get out of its own way.

Janet Yellen, nominated to succeed Ben Bernanke as the next Chairperson of the Fed also made it clear that she will continue the quantitative easing program. The result has sent the Dow soaring and put a further damper on any rate gains for longer-term instruments. In addition the Euro-zone reported slowing growth, further depressing growth prospects for the global economy and demand for U.S. goods and services.

At this point, any economic uptick is obscured by all of this other noise. It will be interesting to see how sales come in this Holiday season. A blockbuster season woutl auger well for economic growth. Still, I remain optimistic that economic growth has not stalled out and that once the dust settles from the shutdown and bickering in D.C., the debut of Obamacare, and Ms. Yellen's arrival (assuming she is confirmed) some sense of growth and optimism will return.

So if we look at the scorecard:

• Taxes & Government: Increasing - drag on growth. Negative
• U.S. economic growth: Slow to moderate. A protracted fight on the debt ceiling has hit growth and lowered rates. While this was improving last month this month we'll call it: Neutral.
• Europe and the world: Europen and Japanese growth slowing. China prospects improving. Overall, world picture is improving. Neutral
• Technology: Gas prices at the pump coming down and plentry of natural gas for the cold winter months due to fracking and other extraction innovations. Slightly Positive.

My outlook: The government shutdown and default embroglio and healthcare rollout have taken some wind out of the economies sales. Still, as long as the politicos are not back at it in 3 months the damange should be relatively short. Short term rates will continue to fall for a bit longer even as longer term rates continue to rise. The Fed will increase the Federal Funds rate within the next 14 months. Savings rates will hover in the 2-3% range by the end of next year.

Savings Accounts or CDs?

The data continues to show that opening a savings account is a better bet than a 1-3 year term CD and I expect this to hold through 2013. Online savings accounts have held the line over the past year and even though CD rates have stabilized and ticked up, the premium is still not enough to jusity locking the money away. While the premium for opening a 5 year CD over a 1 year CD has increased over the past six weeks, it is still only at 0.722 versus over 1 percentage point in October 2011. In a rising rate environment, it does not make sense to tie up money for 5 years with only a 30 basis premium.

Is it worth it to go long and open a 5 year? I don't think so any more. I think the 5 year CD rates are just too low and that you'd be better off putting your "safe" money into an online savings account and waiting for rates to rise. I spoke to one banker several weeks ago who said that "no one was investing in long-term CDs." Keep your powder dry.

For money you want to keep liquid, go with online savings accounts. They offer better rates than 1-3 year CDs and athough several banks have dropped rates in the past month, they have still offered decent rate stability over the past year and a half.

Make the best of a tough savings situation in 2013

Yields may be low in 2013 but a savvy saver can boost the return with no increase in rate by rate shopping. By shopping around, a saver can earn an extra half to full percentage point. On $100,000, that's $1,000 in extra cash per year. Remember, even in today's environment, there is competition for your cash.

Get Our Weekly Rate Update E-mail Newsletter

If you haven't already, sign up for the BestCashCow Weekly Rate Update Newsletter and get the best rates from your state or from around the country delivered right to your email box. It is free and takes 30 seconds to do. Sign up.

• Find the best savings account rates.

I am not a big fan of long-term CDs right now. I think the rates are very low, especially compared to more liquid online savings accounts, and that they do not compensate enough for the risk of rising rates and inflation sometime in the future. The other day, a user on BestCashCow asked what I thought about bump-up CDs. 

For those not familiar with Bump-up CDs, they generally provide the depositor with the ability to increase the rate a specified number of times during the length of the CD. On a five year CD for instance, the depositor might be able to raise the rate one or two times during the five years. The idea is that if interest rates do rise significantly sometime during the term, the CD rate can reset at a higher rate, taking advantage of this rise in rates. At the same time, if rates decline, the CD can remain at its original rate. 

In theory, the concept is sound. Bump-up CDs allow depositors some flexibility so that if rates rise, they won't be stuck in a low yielding CD. 

The main criticism of a bump-up CD, as stated in this Kiplinger article, is that the interest rate on a bump-up CD can be substantially lower than on a regular CD to compensate for this flexibility. I did some analysis of bump-up rates versus regular CD rates and surprisingly found them relatively close and sometimes better than their regular counterparts.  For example, Bank of America has a bump-up product that it calls its Opt-up CD.  The starting rate on the 18-month CD is 0.16% with a $10,000 minimum deposit (it's a pathetic rate) but the regular rate on an 18 month CD was actually worse at 0.07% APY. Likewise, CIT has a bump-up that pays 1.20% as its initial rate while the regular rate is 1.09%. And Ally Bank, which has spent enormous sums of money promoting its Raise Your Rate CD pays 1.30% APY for a 4 year bump-up versus 1.50% APY for a 5 year regular CD (it doesn't offer a regular 4 year CD). While Ally's bump-up rate is lower I'd take the bump-up in exchange for giving up 20 basis points. A quick survey shows that many bump-ups are actually beating regular CD rates in some cases, or coming close to regular rates, even with the added flexibility. 

• To view current CD rates, please click here.

Banks are offering such comparable CD rates because they really don't expect interest rates to rise very much over the next couple of years. As rates have fallen over the past five years, bump-ups have beena good marketing ploy but the rate-increase feature hasn't been used. But now that rates seem to be on the rise, albeit a very gentle rise, I expect depositors will be more eager to seek out bump-ups. I also expect banks will begin to offer less yield on their bump-ups. Before that happens, depositors might have a short window of opportunity to both get a good rate and the flexibility to bump-up to even higher rates in the future. 

Some Select Bump-Ups to Consider (these rates may be old. Please check our rate tables for updated rates).

CIT

1-Year Achiever CD: 1.00% APY

2-Year Achiever CD: 1.20% APY

You can increase your rate and add additional funds once during the term of the CD.

Ally Bank

2-Year Raise Your Rate CD: 1.00% APY

4-Year Raise Your Rate CD: 1.30% APY

You can raise your rate once with a 2-year CD and twice with a 4-year CD if rates go up during the term period.

Digital Credit Union

Jump-up regular certificate 27 months: 1.13% APY

Jump-up jumbo certificate 27 months: 1.23% APY

Jumbo certificate has a $25,000 minimum balance. Depositors can jump up the rate once per term.

If you find any more good bump-ups post them below and I'll add them to the list.

Update: October 14, 2013

Shutdown talks have merged with the debt limit deadline. Washington is now sitting on a double powder keg of explosive news that has the potential to really knock the economy right out of the ring. All eyes have turned to Washington, not where you want the business world to be looking. The WSJ published an article (login required) today saying what we have known from the start, a prolonged government shutdown will hurt the economy and prolong the Fed's bond buying. That means lower rates for longer. Consumer confidence is already plummeting and the stock market is heading down. Throw in a debt default and we will have economic havoc. On days like this, I'm glad to have some of my money in cash, in good solid banks.

Update: October 7, 2013

It now looks like the shutdown talks are going to merge with the discussions on raising the debt limit. We've walked this tightrope before and it is a damaging game of brinksmanship our leaders are playing with the econony. If the issue is not resolved in the next week, look for these talks to create economic uncertainty and anxiety which will reduce growth, dampening interest rates for the next 6 months. In the unlikely case the government does default on its debt, all bets are off. The stock market will likely plunge, and interest rates on longer-term instruments such as mortgages will soar. Short term rates will remain low, as they are set by the Fed. But it might not matter because the financial markets could seize up. The global economic system relies heavily on Treasuries, and the fact that Treasuries are a risk-free instrument. 

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After weeks of back and forth bickering, the U.S. Federal government entered a partial shutdown today as Congress and the President failed to reach an agreement on a continuing budget resolution. While the politics of this are best left to other sites, we thought it wise to take a minute and think about what, if any impact this shutdown would have on savings and borrowing rates. The answer? It depends on how long the shutdown lasts and how the government is able to resolve it and move forward. A prolonged shutdown will slow confidence in the economy and increase unemployment, leading to lower rates on mortgages and other loans, as well as on savings and CD products. 

Confidence is a mainstay of economic growth. If consumers are not confident about the future, they will delay purchases or not make them at all. Businesses act in the same way. The mad scramble in Washington does little to increase confidence and, if anything, makes both households and businesses wary about investing in the future. In addition, the inability for Congress and the President to agree on the continuing funding resolution bodes ill for the upcoming debt ceiling deadline. If the Federal government remains paralyzed and cannot fund itself, and this carries over to a default on U.S. debt, the results could be economically catastrophic. Why? Because U.S. government debt is considered to be risk free and this assumption is used to not only build portfolios, but calculate the return on projects and business investment. Any default would irretrievably alter this assumption. Domestic and global confidence would be sorely shattered. 

The Federal government is the largest employer in the United States, providing jobs to over 4,00,000 individuals. The partial shutdown is expected to furlough 800,000 workers and another 1,000,000 employees are to work without pay. That means that at least 1.8 million employees will not receive payment for the duration of the shutdown. Depending on what Congress decides, furloughed workers do not need to be paid for their time out of work.  Approximately 8.8 million jobs were lost during the Great Recession which means that the shutdown could have 17% of the impact of the Great Recession from a jobs standpoint. That seems pretty significant. Moody's Analytics estimates that failure to keep the government operating combined with a failure to raise the debt ceiling could cut fourth quarter economic growth by up to 1.4 percentage points. Considering that the baseline economy is only growing in the 2-2.5 percent range, that brings it perilously close to no growth.

The housing market may also suffer because of the shutdown. While the FHA says that it will continue to underwrite and approve new FHA loans, which constituted 45% of all mortgages used to purchase homes in 2012, it will only have a skeleton staff of  4% of its workforce to handle approximately 60,000 loans per month. 

So, how will this all impact rates? The biggest driver of rates is the economy. If the economy is doing well, the Fed will begin to taper its purchase of bonds, and rates on mortgages and other lending products will rise, as they have been doing. In addition, longer-term deposit products, such as 5 year CD yields will also continue to go up. Eventually, as the economy gains more steam and the unemployment rate continues to fall, the Fed will raise the Fed funds rate and short term deposit rates, like savings accounts and money market account rates will also move up. The shutdown provides another tailwind to an economic recover, slowing the economy, and depressing both deposit and borrowing rates. The longer the shutdown, the stronger this tailwind.

• If you are a borrower, the longer the shutdown goes, the more it may lower borrowing rates.  The recent run-up in mortgage rates was already muted by the Fed's decision to keep buying bonds. The shutdown will only reinforce this and extend the period of lower rates. But there is a steep downside since government backed mortgages will not be available.  
• If you are a saver, the longer the shutdown goes, the more it will blunt the recent rise in long-term CD rates and prolong rock-bottom savings account rates. 

For the third month in a row, longer-term CD rates have risen. And for the first time, short term CD rates showed some signs of life, rising slightly before falling back and staying flat. The month-over-month declines we saw over the last five years appear to be over.

From one month ago, 12 month average CD rates decreased by two basis point from 0.353 to 0.351% APY. They actually rose slightly at the beginning of September before falling back, the first rise in over two years. Average 3 year CD rates increased from 0.710 to .715% APY and 5 year average CDs increased from 1.056% to 1.073% APY, up from their low of 1.049% APY in June. This increase may seem minor, and it is, but it is the most sustained increase we have seen in deposit rates since the middle of the financial crisis in 2008-2009. Online savings rates did not join in on the party and fell slightly from 0.689 to 0.681% APY. Online savings accounts have been the bright spot of the last couple of years, retaining relatively high rates even while CD rates crashed. If CD rates continue to rise it seems likely online rates will rise with them.

* * * *

Keep track of deposit rates

If you have not already, sign up for the BestCashCow Weekly Rate Update Newsletter and get the best rates from your state or from around the country delivered right to your email box. It's free and takes 30 seconds to do. Sign up.

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All signs point to the economy gaining momentum through the end of this year and into next year. I do believe that this economic upturn is real and that rates will continue to slowly rise from this point (as long as the Federal government does not botch the recovery with bad policy).

The chart below shows the trend in average rates since October 2012.

Top Rate Recap

During this period, top savings and CD rates stayed pretty much status quo.

• Online Savings: AmTrust Direct dropped its rate from 1.05% APY to 0.80% APY, ceding the top spot among nationally available online savings accounts to GE Capital Bank at 0.90% APY.
• 1 Year CD: Nationwide Bank holds the top spot at 1.06% APY with a $100,000 minimum balance. GE Capital Bank is right below it with a 1.05% APY rate and a smaller $500 minimum balance.
• 3 Year CD: Last month, the best rate was 1.30% APY but Salem Five Direct is offering a 3-year CD that pays 1.50% APY.
• 5 Year CD: iGoBanking.com continues to offer a 2.05% APY CD while EverBank offers a 2.04% APY CD.
• Rewards Checking: Hope Credit Union and Money One Federal Credit Union both have the top rewards checking rate of 3.01% APY for balances up to $10,000. Both credit unions are open to members from across the country.

It's possible to find even better rates at local banks and credit unions (especially for CDs). You can search for better local rates here.

Online Saving and CD Spread

The difference between average 1 year CD rates and average online savings rates continued to gradually decline from the high it achieved in May 2013. On average, online savings account rates pay 0.330 percentage points more than 1 year CDs, up from 0.23 percentage points more at the beginning of last year but down from the spread's high of 0.344 percentage points in May. In addition to paying more than 1 year CDs, online savings rates pay almost the same as 3 year CDs. Despite the fact that online savings rates have lost some ground to 1 year and 3 year CDs, in a rising rate environment, it makes more sense to stay liquid with an online savings account than to lock money into a low rate CD. If the spread declines dramatically then this may be worth revisiting.

General rate environment

It's clear that longer-term rates want to run. Five year CD averages increased by 18 basis points and the rate rise appears to be accelerating. The increase in rates is also filtering down to 3 year and even 1 year CDs.

The Fed is the single biggest driver of rates at the moment and the lack of clarity about who will succeed Ben Bernanke as Chariman has thrown the markets for a loop. Larry Summers was thought to be more liable to raise rates sooner rather than later while Janet Yellen, now the leading candidate, is more prone to stick with current Fed policy. Either way, a growing U.S. economy will make it unlikely that rates will be able to go back down. That is not to say rates will spike up significantly. For deposit accounts, I expect the way up for now will be as gradual as the way down has been for the last three years. Depositors waiting for CD yields of 5% will still have a wait of years while the U.S. economy fully deleverages and heals from the financial crisis. My best guess is it will be sometime in 2017 before we see a 5% CD.

So if we look at the scorecard:

• Taxes: Increasing - drag on growth. Stable.
• U.S. economic growth: Slow to moderate. Improving. A protracted fight on the debt ceiling could hit growth and lower rate gains.
• Europe and the world: Europe leaving recession; Japan strong growth; developed world slowing but still growing. Overall, world picture is improving. Improving.
• Technology: Other than fracking, no innovation that seems capable of spurring growth at the moment. Stable.

My outlook: Savings and CD rates have stabilized and will not fall significantly lower. Long term rates will continue to drift up and short term rates may rise slightly. The Fed will increase the Federal Funds rate within the next 12 months. Savings rates will hover in the 2-3% range by the end of next year.

Savings Accounts or CDs?

The data continues to show that opening a savings account is a better bet than a 1-3 year term CD and I expect this to hold through 2013. Online savings accounts have held the line over the past year and even though CD rates have stabilized and ticked up, the premium is still not enough to jusity locking the money away. While the premium for opening a 5 year CD over a 1 year CD has increased over the past six weeks, it is still only at 0.722 versus over 1 percentage point in October 2011. In a rising rate environment, it does not make sense to tie up money for 5 years with only a 30 basis premium.

Is it worth it to go long and open a 5 year? I don't think so any more. I think the 5 year CD rates are just too low and that you'd be better off putting your "safe" money into an online savings account and waiting for rates to rise. I spoke to one banker several weeks ago who said that "no one was investing in long-term CDs." Keep your powder dry.

For money you want to keep liquid, go with online savings accounts. They offer better rates than 1-3 year CDs and athough several banks have dropped rates in the past month, they have still offered decent rate stability over the past year and a half.

Make the best of a tough savings situation in 2013

Yields may be low in 2013 but a savvy saver can boost the return with no increase in rate by rate shopping. By shopping around, a saver can earn an extra half to full percentage point. On $100,000, that's $1,000 in extra cash per year. Remember, even in today's environment, there is competition for your cash.

Get Our Weekly Rate Update E-mail Newsletter

If you haven't already, sign up for the BestCashCow Weekly Rate Update Newsletter and get the best rates from your state or from around the country delivered right to your email box. It is free and takes 30 seconds to do. Sign up.

• Find the best savings account rates.