Yields on CDs at highest since '01

Staggered dates for purchases can boost returns

With CDs paying the highest returns since 2001, now may be the time to buy.

In Boston, the average one-year certificate of deposit currently yields 3.07 percent in interest, up from 2.02 percent a year ago, according to data from Bankrate.com.

Countrywide Bank, which has six offices in Massachusetts, offers 4.75 percent.

''Now is a good time to buy shorter maturities -- three-month, six-month, and one-year CDs," said Greg McBride, senior financial analyst at Bankrate.com.

He recommended people buy short-term CDs, but hold off on long-term CDs temporarily, with the hope that interest rates will go higher. Yields on five-year CDs have increased only slightly in Boston, to 3.72 percent, up from 3.54 percent a year ago, according to Bankrate.com. Explanations vary as to why long-term CD rates have not risen substantially.

Customers who would rather lock in rates can hedge their bets by purchasing several CDs with different maturities, and staggering the dates they purchase them, said John Bitner, chief economist at Eastern Bank. (For example, they could buy a one-year CD this month, a two-year CD next month, and a three-year CD the month after.) The staggered purchase dates let customers take advantage of any possible future rate increases by the Federal Reserve.

''If rates drift a little higher, you can take advantage of that," said Bitner, who predicted that the Fed will raise rates at least once more, and maybe twice. He recommends that investors lock in longer-term CDs now, using the staggered approach.

''You'll probably come close to hitting the high point for the cycle," he said. ''No one knows exactly when it'll be, but we're getting close."

Sasha Talcott can be reached at stalcott@globe.com.