Q. Which is best, a 6-month CD at 4.8% APY or a 1-year CD at 5.5% APY? Won't you make half the return on principle with the 6-month CD?

A. The first question you have to ask yourself is whether you need access to that money before this time next year? If you don't, then go for the higher rate on the one-year CD.

With an annual percent yield of 5.5%, you’ll make $55 for every $1,000 you invest in the one year CD. With a 4.8% yield you’ll make about $24 over the next six months and $48 for the year if you reinvested in a second six-month CD at the same rate.

The only other reason to opt for the six month CD is if you think interest rates are going to be higher in the spring and you can reinvest at an APY higher than 5.5%. There’s not much reason to think that, so locking in now for the entire year makes the most sense.

Q. I just got out of an annuity because it only paid 3.23 %. After much searching on the Internet for something to earn more money for me I found your Web site and some banks offering better rates on CD's. IndyMac Bank has 5 months at 5.50% and a bank called Ascencia has 12 months for 5.44%. I am 77 and don't know which is best for me.

A. You were smart to ditch the poorly paying annuity. CD rates are the highest they’ve been in years and it doesn’t look like they’re going to change much until spring. As a result, there’s nothing wrong taking advantage of the good IndyMac rate and it gives you the flexibility to reinvest that money if some better short-term special comes along in late March. The 12-month CD from Ascencia is also a good deal and gives you a little protection if rates edge down. So we’d suggest you put a portion of your money in each. This is a little like “laddering,’’ which is buying a variety of terms so that a portion of your investment is always reaching maturity.

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