2011 Interest Rate Forecast
Rate forecast
CDs to yield pain without gain

The caveat? Don't be dazzled by high interest rates. Double-check that the CD is issued by an FDIC-insured institution, or, if it's a credit union, that it's insured by the National Credit Union Administration. Nearly every bank, thrift and credit union in the country is required to carry FDIC or NCUA insurance, but scammers have been known to peddle uninsured CDs.

Research the safety of any bank using Bankrate's Safe and Sound ratings.

An eye on indicators

To keep track of which way the interest rate winds are blowing, savers should keep an eye on Treasury security yields. They reflect everything from Fed expectations, how the economy is doing and inflation prospects.

"If you wanted one place to look to get a gauge, Treasury yields are a good representation of that," McBride says of Treasury yields.

When the Fed will actually move interest rates is anyone's guess. One thing is certain, however: It won't happen until inflation is a concern. As a result, Mike Schenk, senior economist for the Credit Union National Association, fears savers may face a prolonged yield drought for the next several years.

"Without those substantial increases in economic activity, without improvements in labor markets, you won't have inflation pressures," Schenk says.

McBride concurs. "The best that investors can hope for would be very modest improvement (in yields) and even that is contingent on continued improvement in the U.S. economy and a move toward the Federal Reserve raising short-term interest rates," he says.

Bankrate has a comprehensive analysis of where all sorts of interest rates are likely headed in 2011, and how these moves will affect you. Go to 2011 Interest Rate Forecast to view the full report.

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