Are You Earning Top Bank CD Rates?

Bank CD rates are moving higher as the Federal Reserve Bank continues it's "measured" effort to control inflation by raising the Federal Funds rate. The US economy is still growing at a reported 4%-5% rate and is beginning to show increases in the inflation rate, especially in the food and energy sectors, which the government manages to leave out of the core CPI calculations.
Government economists seem to believe that if they just leave out the costs of food and energy prices increases in those important areas won't effect you and the rest of the US population. Obviously that's strange thinking. However, the US government has made sure that their government economists use creative calculation methods over the years which has tended to show better performance for the US economy than would be the case with previous calculation meathods.
With commodity prices, especially metals like copper, gold, lead, tin, and zinc, and crude oil soaring to all time highs on increased world demand, especially from rapidily developing countries like China and India, there is the strong probability that interest rates will at some point react to inflationary pressures and surprise on the upside as this business cycle progresses.
It appears that it is already too late to head off a a serious dose of inflation no matter what the US Federal Reserve Bank does from here. The US has flooded the world with US dollars for too long and the financial trade and deficit imbalances are too great. There is a high risk that the US Dollar is in danger of a sharp decline at some point, which will only increase inflationary pressures in the US. Hold onto your hats, folks, you haven't seen anything yet.
As bank CD rates are directly tied to the Federal Funds rate, and the Federal Reserve will have to continue to raise Fed Funds rates if it hopes to at least slow down the increase in the inflation rate, it means that investors in bank certificates of deposit will be recieving more income from their CD investments than over the past few years.
Alan Greenspan and company held interest rates at artificially low levels for too long, flooded the world with dollars, and now the financial imbalances that these policies created have to be addressed. The market will eventually see to that.
This is good news for long suffering certificate of deposit investors. Bank CD rates at artificially low rates have been punishing to the nations CD investors, especially those who are retired and look to CD interest income to help them to meet daily living expenses.
Probably CD rates will trend higher for the next few years. The unfortunate thing is that while you as a CD investor will receive more CD interest income you will also be paying higher prices for just about everything that you must purchase. But at least with additional certificate of deposit investment income being earned there will be more income to offset the higher expenses.
While you as a CD deposit certificate investor will benefit as CD rates move higher you should not get lazy and just go along with the ride. What may seem like small differences in CD rates offered by competing banks may actually amount to significant percentage differences in overall certificate of deposit returns.
By switching your CD investment to a FDIC bank paying higher CD rates (HINT: Internet banks have far lower operating costs than traditional banks and can afford to pay higher CD rates ) you can achieve higher income for a minimum amount of effort.