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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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.

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• Find the best savings account rates.

Amtrust Bank was a Ohio-based bank that had very strong CD rates in 2007 and 2008. The CD rates often topped the BestCashCow.com CD rate tables for 2 and 3 year CDs. News of its recent seizure by the Office of Thrift Supervision caused me concern as I continue to own CDs with the bank that pay over 4%. New York Community Bank, which acquired Amtrust in secret auction from OTS, has now announced that it will honor the CDs until maturity.

Once again, this proves that purchasing long term CDs, online or in branches, from troubled banks was a good strategy in 2007 and 2008. As long as you remain below FDIC limits, your money is safe and the terms of the CD until maturity are usually honored. I purchased CDs off of the BestCashCow.com listings at IndyMac Bank, at Wachovia, at Corus Bank, at Washington Mutual and at Amtrust. With the exception of Corus, which was not acquired but was closed and where I promptly received payment, all of the CD terms have been honored.

I am aware, however, that there have been instances where brokered CDs were not honored but were terminated by the acquiror.

I just wish that I had purchased long-term CDs back in 2007 and 2008.

Amtrust Direct has raised their CD rates so that they now offer the leading rate on 1 and 2 year CDs.

This is the clearest sign yet that small regional players are raising their CD rates to compete with larger players, such as Bank of America / Countrywide, ELoan, Wachovia and Wamu. The rise in longer term interest rates also allows all of these banks to become more competitive.

Amtrust has, like most regional banks, been hit hard by the recent financial crisis so investors would be well advised to keep all deposits below FDIC insurance limits.

Here are some notes of Amtrust services and ease of use:

The bank has always received positive reviews in the forum section of this website. Contrary to certain messages, no hard pull is performed for opening CDs (a hard pull is still done for opening their savings account). Online application allows for funding by ACH transfer, initiated directly by Amtrust, or check (no wire transfers). Accounts may be opened with up to two beneficiaries, but IRA CDs are not available online.

Users report Amtrust Direct to be among the easiest and quickest accounts with which to open an online CD account. The process can be set up immediately online, without external paperwork to fill out, sign and return, and ACH funding instructions can be entered in order to "pull" the funds from another account. Accounts are ordinarily funded within several days.

Interest disbursements can be done every six months for $2.50 by check or free by ACH transfer. The early withdrawal penalty is 3 months of interest for terms 11 months or less, 6 months for terms of 12 to 23 months, 9 months for terms 24 to 47 months and 12 months for terms of 48 months or more.

When CD matures, you can request closure of the CD by either mail or online by a secure message. Payment may be made by check or wire transfer (both $20 fee) or transfer the money to your AmTrustDirect liquid account (e-Savings or e-Money Market account), not ACH transfer.