Caiaimage/Robert Daly/Getty Images
Check out high-interest, low-penalty CDs
"Generally, any money earmarked for the short-term (one year or less) should be in a liquid position," says Gage DeYoung, a certified financial planner and founder of Prudent Wealthcare in the Denver area. "That being said, it is frustrating to get zero percent on cash."
And today's average CD rates are indeed very low. Instead, look for above-average interest rates and low early withdrawal penalties.
If you can withdraw your balance anytime without sacrificing much interest, you can move your balance to higher-paying CDs as rates climb. In the meantime, you've locked in a higher interest rate than you could have earned by keeping that money in a savings or money market account.
You could also create a short-term CD ladder to increase your returns.
Ready to purchase a CD? Search Bankrate.com for the top-paying certificates of deposit near you.