Expert: Gina Boykin - 2/26/2009

Question
which brings back a better return on investments. CD OR US Savings bond?

Answer
It depends.  There are different CD rates depending on the time period you select (for example, a 24 month CD has a higher rate than a 6 month CD).  Rates also vary greatly depending on the bank.

Also, there is more than one type of savings bond.  There are EE bonds and I bonds.  I bonds' rates are only fixed for the first 6 months - after that only part of the rate stays fixed and the other part varies depending on the inflation rate.  EE bonds' rates are completely fixed for the entire period of ownership, and are currently lower than I bonds.

Also, you must keep in mind the timeframe you wish to own your CD or savings bonds.  Both have penalties for early redemption which can greatly reduce your return, but they each vary.

To really compare, you'll have to research rates at the time you think you want to purchase.  For the best CD rates, the best website to use is bankrate.com.  For current bond rates (and also to purchase bonds directly from the US Treasury), go to treasurydirect.gov.