The toboggan ride isn't over yet, but it's looking like it's in the final stretch.
After a relentless six-year slide, annual yields on certificates of deposit finally appear to be "in the bottoming process," according to Greg McBride, senior financial analyst for the interest rate tracker Bankrate.com.
Rates on one-year CDs, which have been hovering at record lows since May, averaged 0.24 percent nationwide this week, Bankrate.com said. That's down from 0.28 percent in January and 0.30 percent one year ago.
Longer-term CDs have edged up recently, with a five-year certificate averaging 0.79 percent this week. That's up from the rock bottom average of 0.77 percent in July, but down from 0.90 percent in January and 1.02 percent in September 2012.
By comparison, savers were earning an average of 3.77 percent on one-year certificates and 4.02 percent on five-year CDs in August 2007 -- the peak just before the economy began to buckle and rates started to fall.
"It's been a pretty steady drip, drop lower over the last 12 months into this year," Mr. McBride said.
"Rates have only shown signs of reaching a bottom in the past few months."
With the Federal Reserve promising to hold short-term interest rates at record lows into 2015, it will be some time before savers see a meaningful upturn, however, Mr. McBride said.
Yields on short-term CDs aren't expected to change much well into next year, he said. Longer term CDs "will start to tick up, but not enough to make anybody happy."
"We're still 18 months, maybe 24 months away from the Fed beginning to boost short-term interest rates. Even once they start, they have a long way to go to get rates back to more normal levels," Mr. McBride said.
"The improvement will be pretty slow."
At the current average of 0.24 percent, a one-year, $10,000 CD would earn only about $24 in annual interest.
Fed chief Ben Bernanke has said the central bank will be watching for unemployment to drop below 6.5 percent and inflation to rise above 2.5 percent before moving to boost rates by raising the federal funds rate.
The meager returns on bank deposits underscore the need to have a diversified savings portfolio beyond federally-insured cash investments, including dividend-paying stocks, bonds and real estate investment trusts, Mr. McBride said.
No matter where interest rates stand, the best way to maximize CD yields is to shop around, he said.
Nationwide, the top-yielding one-year CDs at federally-insured institutions are paying from 1 percent to 1.05 percent.
"Not everybody is paying the same yield," he said.
"The largest banks tend to be up to their ears in deposits, so they don't have to pay up. Smaller banks, Internet banks, even credit unions can be viable alternatives for squeezing out a little extra in yields," he said.
Besides comparing rates on standard CDs, savers should ask about special deals. Banks periodically offer higher promotional rates when they want to attract deposits.
Locally, for example, First Niagara Bank is offering a one-year promotional CD with an annual yield of 0.50 percent, substantially better than its regular one-year CD paying 0.05 percent.
Many banks also offer other types of deals, such as bonus rates for customers who maintain a checking account with the institution or for those with big balances.
At Dollar Bank, customers with one of three types of checking accounts earn .25 percent on a one-year CD vs. the standard 0.15 percent.
At PNC, customers with at least $10,000 can get a five-year "callable" CD paying 1.1 percent, which is almost twice the rate on the bank's regular five-year CD.
Under the terms, PNC can cancel the rate at any time after the first 12 months. Customers then have 10 days to access the money without penalty, or allow it to rollover into a 12-month certificate at the going rate.
Patricia Sabatini: email@example.com or 412-263-3066.