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Shopping critical with long CDs

By Claes Bell ·
Tuesday, February 26, 2013
Posted: 5 pm ET

Are you the type to stand in grocery aisles painstakingly comparing prices between yogurt brand A and yogurt brand B? If you're not doing the same with long-term certificates of deposit, you're losing out.

When it comes to short-term CDs with maturities of a year or less, comparison shopping can net you a substantial boost in yield. But where it's really critical is with long-term CDs, according to statistics from banking industry research firm Market Rates Insight.

The difference between an average-yielding six-month CD and the best yields available is 0.69 percent, or 69 basis points, according to MRI data. A basis point is one-hundredth of 1 percentage point.

That's not chump change; on a $10,000 CD, it amounts to about $35, assuming monthly compounding.

On a long-term CD, the difference is far more pronounced. On a five-year CD, the spread between a run-of-the-mill yield and the best yield available is 131 basis points, or a little more than $700 on a $10,000 CD, assuming monthly compounding.

In these low-yielding times, that's a big difference, especially when you consider it only takes a few minutes to find the highest yielding CDs online rather than simply rolling over your CD balance at your present bank.

What do you think? Do you spend the time to find higher CD rates? Have you given up on CDs altogether?

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