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CD rates in 2013

Sheyna Steiner

CDs and bonds offered little return

Rates on certificates of deposit steadily declined in 2013. The average one-year CD rate started the year at 0.28 percent and will likely finish the year around 0.23 percent, where it stood at the end of November.

The typical five-year rate entered 2013 at 0.9 percent and is now 0.79 percent.

"Yields on CDs, already at record lows at the beginning of the year, got progressively worse. The decline was a slow, steady drip but nonetheless yields were moving the wrong direction for savers," McBride says.

While CD rates were mired in the doldrums for the year, other types of fixed-income vehicles gave investors a taste of volatility in 2013.

"The Fed began talking about tapering, or rather talking about thinking about tapering. It began in May and rates moved quickly," says Donald Cummings, founder and portfolio manager at Blue Haven Capital in Geneva, Ill.

It was a scary time for bondholders. As interest rates rise, the values of existing bonds fall, and for a brief period in 2013, rates rose quickly and bond values plummeted. From May to September, the yield on the 10-year Treasury rose from 1.66 percent to 2.98 percent. The price of bond funds and ETFs took a hit. IShares 7-10 Year Treasury Bond Exchange-Traded Fund, which mimics Barclay's 10-year Treasury Index, was down about 8 percent over the summer, falling from $109.05 on May 2 to $100.41 on August 30.

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