As per my prior post, my wife and I are building a 1 year CD ladder ($500 per month) as part of our cash holdings. Unfortunately, ING Direct lowered the interest rate on a 1 year CD to a whopping 1.75%. I considered skipping this month's contribution (month 5 in the 12 month plan) because of the dismal return.
Nevertheless, the low interest rate reflects the fact lenders and borrowers think interest rates will continue to fall or remain flat. For that reason, we made our contribution. The upside of laddering CD's is the opportunity to profit from higher interest rates. Some of my older CD's are paying in excess of 4%. Our blended rate on all our CD's is in excess of what we would earn in a high interest savings account or a money market account.
Currently, we have accounts at ING and Emigrant Direct. In all likelihood, I am going to find another bank to protect against low rates by ING. As for Emigrant, they seem to favor longer term CD's that I don't want.