The beginning of the end of very low rates on certificates of deposit may be in sight, but for savers, the days of higher interest rates can't come soon enough.
While there are no perfect CD equivalents that offer the same types of returns with a guaranteed return of principal, savers can sit out the yield drought in a few different types of accounts.
Money market accounts
Like CDs, money market accounts offer a guarantee from the Federal Deposit Insurance Corp. for up to $250,000. Unlike CDs though, they are liquid accounts which means there is no penalty for withdrawals when a better deal comes along. Savers should look for a money market account without a monthly maintenance fee because that will eat into the already paltry returns. According to Bankrate's weekly rate survey, the average money market account yield is 0.11 percent.
Bank customers who can jump through a few hoops for a little extra yield may be able to find a good deal in high-yield checking accounts. Bankrate's recent high-yield checking study found that the average interest rate is 1.64 percent. There could be balance caps, debit card and direct deposit requirements to deal with, but for savers in need of liquidity and a little bit of yield, they are an option.
Money market funds
In getting away from bank products, savers have to give up the FDIC guarantee. Though the rules around money market funds are in flux, they still offer a fixed net asset value of $1 per share. The average seven-day yield for a retail money fund is 0.01 percent, according to iMoneyNet, a money market fund research company. That's not very much, and there are still fees to consider. The benefit of money market funds is their liquidity and relative stability.
Stretching for yield above the returns available on very safe instruments will likely boost returns, but they also increase risk. Master limited partnerships, or MLPs, and real estate investment trusts, or REITs, have benefited from the low interest rate environment, but some MLPs and REITs could see a dent in their prices and returns as rates rise. Bond mutual funds are also subject to interest rate risk, particularly if the fund holds longer-term bonds.
Where are you holding your money while you wait for CD rates to recover?
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Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.