In June, the bond market pushed yields up to yearly highs for most terms. The 10-year treasury jumped above 4%. It has since fallen back to 3.50%. The higher rates gave many concern that the housing recovery would be further delayed. With the 10-year back down, that worry seems to be diminishing. However, today the unemployment rate continued to sneak up to 10%. I believe in the state of California it is hovering around 12%.

Among these rates, two of the most important are the Annual Percentage Yield (APY) and the Annual Percentage Rate. This is because these are the tools that can help investors to accurately calculate or compute for the earnings that they can expect to gain from the CD investments that they are about to make.

The APY

It is always better to opt for CDs that are insured especially in our troubled economy. Of course, non-insured CDs can yield higher interests than insured CDs but you have to remember that you are taking greater risks. You may not be able to recoup your money investments if and when the financial institution closes due to bankruptcy or other organizational problems.

One credit financial institution had a 4.0%, 5-year CD for about 3-months. For July, the interest rate was lowered to 3.50%. At some point, the Fed will have to reverse course and begin |increasing rates. I’m guessing that will be in six to nine months. However, rates will probably increase slowly to avoid stalling the recovery. July 10, 2009 Update – A bank is offering a 2Y at 2.90% APY.

Some of the Mega-banks that received TARP funds have been making requests to pay them back. Would you believe, they don’t want the Government looking over their shoulders? Although, I’m a fan of low regulations, I think they need some serious watching over. It really doesn’t seem like the banks have learned anything, except that the Big O will rescue them.

On the other hand, IRA accounts have generally lower interest yields because of the higher administration expenses associated with them. However, the risks will also be lower. Again, always determine if these rates fit into your risk tolerance level and investment plans.

This is very important because the right information on these tools can help investors make the right decision with regard to investing in CDs, which would not be solely based on the rate but also on other important factors as well.

Colin writes for websites where you can compare CD rates and find a great High Interest CD.

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