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.

Spring is in the air, which makes me hopeful. Today is opening day at Fenway Park and the Red Sox had begun the year beating the Yanks in 2 out of 3 and starting with a 4-2 record. Not shabby. Unfortunately, the warm air has done nothing to inflate bank rates. CD rates declined last week for the 77th straight week. Average one-year CD Rates dipped from 0.377% to 0.376% APY. Three year average CD rates dropped from 0.747% to .743% APY. Five year average CDs dropped to from 1.093% to 1.088% APY. The one bright spot, Online savings rates. They stayed stable at 0.707% APY for the fourth week in a row. Average three year CD rates are now just 0.036% apart, or virtually the same. 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: Five banks retain the top spot at 1.05% APY.
• 3 Year CD: PenFed dropped their rate from 1.60% to 1.20% APY last week. Navy Federal Credit Union now has 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 0.331 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

The Department of Labor reported the employment figures last Friday and they were pretty anemic. After several months of decent job growth, hiring decelerated, with employers adding just 88,000 jobs. To really bring down unemployment, we'll need to see several months of 300,000 jobs per month. Employment is a key number for interest rates since the Fed has pledged not to raise rates until the unemployment rate dips below 6.5%.

My outlook: Savings rates will continue to drift lower for the next 9-15 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 .712 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

After over 76 consecutive weeks in which CD rates have declined, and ongoing declines in savings rates, rates finally moved significantly higher last week, for the first time since the financial crisis took full effect in 2008. Average one year CD rates moved up from 0.379% APY to 3.46% APY. Five year CDs moved from 1.100% to 4.75% APY...

Sorry I couldn't resist.

Unfortunately, this is an April Fools joke. April Fools Day! Still, one day, hopefully in the not-to-distant future, I will be able to write these words in truth, not just in jest. Just not today. For this week, the downward trend continues. In the last week, average one-year CD Rates dipped from 0.379% to 0.377% APY. Three year average CD rates dropped from 0.751% to .747% APY. Five year average CDs dropped to from 1.097% to 1.093% APY. Online savings rates stayed stable at 0.707% APY for the third week in a row. We're 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: Five banks retain the top spot at 1.05% APY.
• 3 Year CD: Pentagon Federal Credit Union at 1.60% APY (Update: PenFed dropped their rate to 1.20% APY. Navy Federal Credit Union now has the highest rate at 1.40% APY).
• 5 Year CD: Barclays Bank Delaware now 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 0.330 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

Not much to report on the economic front. The news was relatively quiet last week and remains so today. The buzz in the financial press is a dire NY Times editorial entitled "State-Wrecked: The Corruption of Capitalism in America" by David Stockman, a former congressman from Michigian and former budget director for Ronald Reagan. It's a really doom and gloom article postulating that America's debt is worse than anyone is saying, the bond market is an enormous bubble, and the country is headed for another depression. Here's the concluding paragraph:

"That, of course, will never happen because there are trillions of dollars of assets, from Shanghai skyscrapers to Fortune 1000 stocks to the latest housing market “recovery,” artificially propped up by the Fed’s interest-rate repression. The United States is broke — fiscally, morally, intellectually — and the Fed has incited a global currency war (Japan just signed up, the Brazilians and Chinese are angry, and the German-dominated euro zone is crumbling) that will soon overwhelm it. When the latest bubble pops, there will be nothing to stop the collapse. If this sounds like advice to get out of the markets and hide out in cash, it is. "

Pretty harsh. Maybe this will happen, maybe it won't. I happen to give more credence to Gary Schilling's view that we are five years into a deleveraging process that generally takes 8-10 years to finish. No matter what your belief though, it is smart to keep a certain percentage of a portfolio in cash. And if you subscribe to this doomsday scenario, make sure the bank you keep your cash in is in financially sound shape. BestCashCow lists the Texas ratio of every bank as well as the five year Texas ratio trend as two pieces of data you can use to assess a bank's safety and soundness. If the economy does crash again (I'm not saying it will), I'd be a bit nervous about having a government with $15 trillion plus in debt providing a backstop for my money.

For now, I'm sticking with my forecast. I think rates will rise in the next 9-15 months. But based on the current economic data I think it will be a very gradual and slow rise. I don't think we'll see 5% CDs anytime soon.

My outlook: Savings rates will continue to drift lower for the next 9-15 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 .716 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