A CD's interest rate may not paint the complete financial picture.
Because some banks require a depositor to maintain a checking account to qualify for the most attractive CD rates, consumers may be subject to additional fees and yield hurdles such as monthly maintenance fees or minimum balance requirements on the accompanying checking account.
"To be able to participate in the 'rate game,' banks need to cover their interest rate expenses when they offer much higher rates than the competition," O'Brien says.
O'Brien adds that if a bank pairs checking account fees with higher CD rates, the bank can recover some of its costs.
Don Taylor, assistant professor of finance at Pennsylvania State University in Brandywine, Pa., and Bankrate's investing adviser, says that if the checking account has a minimum balance requirement, the depositor should consider the average yield on the CD plus the checking account.