Interest rates are rising. Where should you stash your cash? (Um, no, not under the mattress.)

Here are some ideas, all of which will yield more than the 1 percent or so you reap from a standard savings account.

Money market accounts

A couple of years ago, the yields on money market accounts resembled the meager ones associated with savings accounts. But when interest rates are rising, money markets are a good bet for your liquid cash – money you’d want access to at a moment’s notice, said Greg McBride, a financial analyst with in North Palm Beach, Fla.

With the highest yields between 4 percent and 4.5 percent, money markets “are a great place for your emergency savings and money you have taken out of the market and are sitting on for a while,” McBride said.

Certificates of deposit

For longer-term cash investments – or, money you don’t need to tap for several months or even years – consider CDs, McBride said.

Among financial institutions reporting to Bankrate, the highest-yield on a six-month CD is 4.55 percent, while the highest on a one-year is 4.8 percent, he said. Both are from Corus Bank in Chicago. A couple firms are offering 5 percent on three-year CDs, according to Bankrate.

Niche cds

Do you think rates are going to keep on rising? And, do you want high returns for little to no time commitment? Then you don’t want a standard CD.

McBride recommended certain niche CDs, such as risk-free, liquid or no-penalty CDs. These kinds of CDs allow investors to withdraw cash without incurring a penalty as they would with standard CDs. “They give you the benefit of a higher yield but the flexibility to take cash out to reinvest (elsewhere) as rates rise,” McBride said.

So-called opt-up CDs, another niche product, allow investors to lock in higher rates – for free – at certain points in the holding period.

Charlotte-based Bank of America Corp. began offering its Opt-Up CDs in September 2004, said spokeswoman Diane Wagner. They work this way: If you purchase an Opt-Up CD and after six months interest rates on new Opt-Up CDs go up, you have a one-time option to reset the interest rate for the remaining term. If you choose to reset the rate, the new rate will be the original rate plus one-half the difference between the current and the original rate. The current annual percentage yield is 3.7 percent. The term is 30 months and the minimum deposit is $10,000.

Bank of America offers an Opt-Up calculator online at to help consumers determine if they want one of the CDs. doesn’t track yields on niche CDs. McBride said that’s largely because the products emerge only when rates are rising, while regular CDs are standard.

Call individual banks to find out special CDs they’re offering.


Where to go for rate info on money markets and CDs lets you search by product, highest yields and state.

-Individual banks’ Web sites often provide such information.

Amy Baldwin covers money-related topics for 20- and 30-somethings in “Out of the Red.” Have a question about your personal finances? Contact her at (704) 358-5179 or Leave your name and daytime phone number.

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