With the Fed cutting its overnight lending rate by a half-percentage point Oct. 29 and a parade of banks then doing likewise to their prime rates, can CD rates be far behind?

Sooner or later, yes, but the slide might not be as swift nor as steep as consumers might think.

While the nationwide average yield for one-year CDs was 2.28 percent, several institutions were offering rates yesterday that were in the 4 percent to 4.3 percent range, according to Banxquote.com.

Those willing to commit for five years can earn up to 5.25 percent, according to Bankrate.com.

There's a healthy, 2 percentage-point spread between the average and best rates, added Greg McBride, senior financial analyst at Bankrate.com.

The catch(es): Many of the best rates involve online banks, limited-time availability or fine print that requires linkage to new savings or checking accounts that pay a lot less interest or require high balances.

Sometimes the best rates involve banks such as Washington Mutual, Corus, GMAC or Countrywide that have been struggling financially.

Still, given that FDIC insurance is created equal for all CDs -- both online and traditional and for both five-star and one-star banks -- it could be that none of those concerns matter much.

"Banks are still very hungry for consumer deposits," said Mr. McBride, who said the choice when perusing online rates can be between a bank with a lower rating and higher yield or vice versa.

"Either path they go, by shopping around they still do better by just expanding their marketplaces," he said of sites such as www.bankrate.com, www.banxquote.com or www.money-rates.com.

FDIC spokesman David Barr said the fact that the best rates can involve lower-tier banks is nothing new nor in itself anything to be alarmed about.

"If a bank needs money for whatever purpose," he said, "[it increases] rates."

High interest rates on deposits are but one of many factors in determining whether a bank is in trouble or not, he said.

"However, a lot of troubled institutions tend to have higher interest rates," he acknowledged. "That's not a recent phenomenon."

Mr. Barr recalled Texas in the 1980s when savings and loans were going bust and offering "The Texas premium," rates well above the national average that sent money pouring into those institutions.

FDIC insurance covers all member institutions strong or ailing, but pre-existing investments in those that actually fail can cause investors some heartburn.

In 1991, he said, the FDIC changed its rules to allow acquiring banks to break CD contracts, something that many consumers might not know. By doing so, the FDIC was giving the acquiring institution the right to "break the rate" and suspend interest payments on CDs issued by the failed bank prior to the takeover.

Mr. Barr explained that the new bank must still pay the accrued interest but can then lower the rate for the balance of time until maturity.

"But you as a customer can withdraw your money without suffering penalty," Mr. Barr said, "so there's little or no risk to you."

Of 8,500 FDIC member institutions, 19 have failed this year, including nine since September. One of the most recent also was one of the nation's oldest, Washington Mutual, which was taken over by JPMorgan Chase on Sept. 25. WaMu was offering one-year CDs at an attractive 5 percent yield through much of September, a rate that JPMorgan could decide at some point to break.

But Tom Kelly, JPMorgan spokesman, said that would be a bad marketing move and wouldn't happen. "We will honor the WaMu CD rates through maturity," he said.

Online CDs aren't for everyone, so many brick-and-mortar banks hedge their bets with online offerings.

"There's very few pure-play Internet banks around anymore," Mr. McBride said. "A lot of regional and local banks use the Net to reach a nationwide audience."

New to the Pittsburgh market, Columbus, Ohio-based Huntington Bank recognized the size of that online generation gap here.

"Particularly among elderly is the fear about banking online," said Maureen M. Brown, regional marketing manager.

"People need to do what they are comfortable with. The next generation, they're looking for both channels," so Huntington promotes both online and branch-office availability at the same rates.