If you are like me, you have been wondering when exactly the Federal Reserve will decide to raise interest rates. Rates have been at historic lows for an extended period; that’s great for borrowers who catch a break on their mortgage or home equity debt, but not so good for savers. Yet with rumblings from Washington that interest rates will have to rise to stem the possibility of inflation, that means that savings in general may soon become attractive again. Certificates of deposit (CDs) are known for their safety, not their huge returns. Still, that doesn’t mean you have to settle for a paltry .50 annual percentage yield (APY).

If you are looking at  (CDs)  in December 2009, the choice may be more about term than rate.  Banks, realizing that savers are hesitant to lock up deposits when higher rates may be just around the corner, are offering somewhat better rates on medium-term CDs. For instance, Ally Bank is offering a 12 month certificate at a fixed rate of 1.90% APY. Utah-based Ally, which has been advertising heavily on a national basis, also offers no minimum deposit on the 12 month term, which is rare. For those who think rates will rise sooner, Discover Bank, Delaware, has a 1.00 APY on a 6-month CD, with a minimum $2500 deposit. For folks with a short-term outlook and a bigger balance, Aurora Bank, Delaware, is offering 1.42% for 6 months on deposits of $100,000 or more. (All the banks discussed above offer FDIC insurance on deposits.)

Ultimately, getting what you want out of your CDs means gauging the potential for interest rate increases in 2010, so make sure you watch for those Federal Reserve updates along with your CD rate charts.