In this 2012 article, I discussed the Bank Direct American Airlines program which was a one-of-a-kind account that enabled depositors to earn as much as 240,000 American Airlines Airmiles a year on deposit balances of $200,000. Depending on your use of the miles, many depositors had found that this compares favorably with the returns on online and branch savings accounts. Even after the implementation of a $12 monthly service change in early 2012, the program remained interesting for those depositing close to the $200,000 limit; those depositing much less found that the charge and the forgone interest ate away the value of the American Airlines Airmiles.

Effective June 1, the terms of the program will change dramatically. Bank Direct will only be giving 100 miles per month per $1,000 deposited on your first $50,000 deposited, and 25 miles per month per $1,000 on all amounts over $50,000. A $200,000 deposit will now earn no more than 105,000 American Airlines miles, fewer than half of the amount previously awarded. Given that you can now earn this many miles by opening a Citibank credit card, it hardly makes sense anymore to tie up your money in an account where you are basically buying miles at $12 a month and foregoing interest.

While American Airlines has averted bankruptcy, it has also agreed to a merger with US Airways. Its miles have already become less valuable due to decreased availability of "Saver" awards on most domestic and international routes. If it follows Delta's precedent, the merger will render its miles close to worthless.

In short it is foolhardy to stay with Bank Direct. It is time to move your money to an interest bearing account.

I went on vacation last week and was driving down to Washington D.C. when news reached me of the Boston Marathon bombing. I grew up and live in Boston and have been at the finish line many times, so the news of the attack came as a shock. Sad. In Washington, we visited the Capitol and when officials asked where we were from and heard Boston, they'd nod their heads and express sympathy. It was a tough week and not one focused on financial events.

I had hoped that when I came back that rates would have done someting surprising, maybe a positive move to counteract the negative events in Boston. But no, the downward trend continues. CD rates declined last week for the 79th straight week. Average one-year CD Rates dipped from 0.373% to 0.371% APY. Three year average CD rates dropped from 0.738% to .734% APY. Five year average CDs dropped to from 1.081% to 1.075% APY. The one bright spot, online savings account rates even dipped a bit, falling from 0.707% to 0.705% APY. We remain on pace to see a sub-1% average APY on a 5 year CD rate by August or September.

Even if the averages are all below 1%, the top rates are still significantly higher. BestCashCow data shows the top rates for some key terms are:

• Online Savings: AmTrust Direct retained the top spot at 1.05% APY.
• 1 Year CD: Three banks retain the top spot at 1.05% APY.
• 3 Year CD: Navy Federal Credit Union continues to have the highest rate at 1.40% APY.
• 5 Year CD: Barclays Bank Delaware occupies the top spot alone at 1.85% APY.
• Rewards Checking: Hope Credit Union and Money One Federal Credit Union both have the top rewards checking rate of 3.01% APY for balances up to $10,000. Both credit unions are open to members from across the country.

Local banks and credit unions often offer better rates (especially for CDs) than online banks so be sure to check them out.

The chart below shows the trend in average rates since October 2012.

The difference in the rate of decline between online savings and CD rates can be viewed on the chart below, which shows the spread between online savings account rates and 12 month CDs. On average, online savings account rates pay 0.334 percentage points more than 1 year CDs, up from 0.23 percentage points more at the beginning of last year but down from the spread's high of 0.344 percentage points in late January.

General rate environment

Bloomberg had an article on the timing of a rate hike with most economists believing it won't happen until 2015. Bottom line is that until unemployment comes down further, we're stuck in a low rate environment.

The National Association of Realtors reported on March existing home sales and the news is no real news. Home sales declined 0.6 percent but according to Lawrence Yun, Chief Economist for NAR, that was because there was more demand than supply. He stated that:

"Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity. In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents."

Bottom line: housing continues to improve but no big gains.

My outlook: Savings rates will continue to drift lower for the next 8-14 months before beginning to move higher. How high and how fast they move will depend on the level of local, state, and federal taxes and cuts; the continuation of a recent economic uptick; technological advances; and the ability of Europe to put its woes behind it and resolve its fiscal problems.

Savings Accounts or CDs?

The data continues to show that opening a savings account is a better bet than a 1-3 year term CD and I expect this to hold through 2013. Online savings accounts have held the line over the past year while CD rates continue to fall. As the chart shows, the premium for opening a longer-term CD has eroded significantly and continuously over the past year. While the premium for opening a 5 year CD over a 1 year CD was 1 percentage point in October 2011, it now stands at .704 percentage points.

Is it worth it to go long and open a 5 year? If you don't need the money, it's probably okay. Rates may begin to rise in the next year but they probably won't shoot up. Inflation looks to remain tame. There is also the chance that we go Japanese and rates continue to decline, bottom out, and stay low for the next 5-10 years. In that case, a 5-year CD today would look good. I don't expect that to happen, but it could.

For money you want to keep liquid, go with online savings accounts. They offer better rates than 1-3 year CDs and athough several banks have dropped rates in the past month, they have still offered decent rate stability over the past year and a half.

If you want to take advantage of the higher rates on longer-term CDs, look to open them at local community banks. BestCashCow research has shown that community banks and credit unions offer the most competitive rates on longer-maturity CDs. Otherwise, you'd be better off keeping your money liquid in an online savings account.

I believe this is the best and easiest strategy for keeping your cash liquid and maximizing your savings over the next year.

Make the best of a tough savings situation in 2013

Yields may be low in 2013 but a savvy saver can boost the return with no increase in rate by rate shopping. By shopping around, a saver can earn an extra half to full percentage point. On $100,000, that's $1,000 in extra cash per year. Remember, even in today's environment, there is competition for your cash.

• Find the best savings account rates
• Find the best CD Rates

No matter what the environment, most people have some amount of money that they cannot afford to lose. And, in order not to lose the money, they refrain from investing it in riskier assets and accept a so-called risk-free rate. Risk-free rates are historically savings accounts, CD rates and the 10-year US Treasury. Today, the US Treasury curve is very compressed, causing many to argue that treasuries and even short-term CDs involve a risk to principal should rates rise. Hence, the only real risk free asset at the moment are cash accounts (savings or money market accounts) and those are only risk free when amounts over $250,000 per individual per insitution are spread across multiple banks or credit unions.

Against this backdrop, Duke Energy has sought to introduce something new for investors to stash cash. PremierNotes program are according to the Duke Energy website:

"... direct investments in new debt obligations of Duke Energy. Under the program, Duke Energy borrows directly from investors by issuing notes. In return, investors receive a competitive floating rate of interest that is very favorable compared to other cash alternatives like bank accounts, short term CDs and money market mutual funds."

Companies offering notes directly to investors is nothing new.[1] Duke is currently offering 1.51% on balances over $50,000 in its PremierNotes program. Longer term, it commits to return 25 basis points above average money market fund rates.

Even though the rate on deposits over $50,000 is above any current savings or money market rate, most depositors will find that the slight increase in yield does not justify the risk involved in foregoing FDIC or NCUA insurance and relying entirely on Duke Energy’s ability to pay. Duke’s junior unsubordinated debt is rated BBB-/Baa3 and its commercial paper rating is A-2/P-2.

Duke Energy, of course, is a great company. It is the energy producer and distributor in the fastest growing region in the US. Its equity is yielding 4.20% and while expensive on a historical P/E basis, it can be hedged in a manner in which you would receive about the same premium for your exposure to the company and still get all the upside. For most, that is a far better way to play Duke.