U.S. Treasury rates are considered one of the most secure investment vehicles in the market.  Treasury yields are backed by the full faith and credit of the U.S. government.  Unfortunately with the security comes returns that are scarcely better than filling your mattress with the cash.  The interest rate on 26 week treasury bills on December 15 was 0.28%.  The rest of the U.S treasury maturities yield similarly dismal rates of return.  As the rates paid on Treasuries reach new lows this also drives down the rates on money market mutual funds since they are one of the largest buyers of short term U.S Treasuries.  A bright spot in these deteriorating rates of return on safe and secure investments can be found in bank CDs.

On Dec 15, 2008 when the 6 month Treasury bill dropped to 0.28% the average 6 month CD was yielding 2.24%.  That’s a yield eight times the rate of the Treasuries with almost identical levels of security and safety.  As long as the bank CDs are invested in an FDIC insured bank and the deposit amounts are within the insured limits established by the FDIC, the Treasury bills and CDs are on equal footing with regards to the backing of the full faith and credit of the U.S government.  The national average for bank CDs doesn’t even tell the whole picture.  Significantly higher CD rates can be found by banks in a variety of states.  Look at our tables for national rates, which include many banks that offer CDs by phone and internet only, and the state table of CD rates to see local banks that offer CD rates well above the national average.

If higher rates are desired, by extending the length of the CD term an investor can find interest rates in excess of 4.00%.  The maturity extension doesn’t have to be more than one year to find safe and secure rates at that amount.  A little research and a quick review of the listed banks and CD rates at www.selctcdrates.com  can lead to much better rates of return.

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