CBS News MoneyWatch – Choosing the right CD in today's rate environment

One positive coming from the Federal Reserve's recent interest rate hikes is that most banks also raised the rates that they offer to savers. In particular, certificates of deposit (CDs) have been relatively attractive for many savers over the past couple of years, following a prolonged period of ultra-low interest rates. However, the CD interest rate yield curve has recently become inverted. Currently, short-term CDs typically pay more than long-term CDs.

Normally, the opposite is true, in part because banks want to entice consumers to lock up their deposits for longer. But because interest rates are projected to fall this year, short-term CDs — typically those with a duration of 12 months or less — often pay more than long-term CDs.

Still, it's not always clear what the best move to make is. Should you go for the highest CD interest rate, regardless of the CD term? Or is it better to gain the certainty of long-term CD expiration dates, even if rates are lower?

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