It's easy to think of why rising interest rates can be troublesome. Look no further than the housing market. If mortgage rates rise, homebuyers can't snag as much house for their money via mortgages. That will likely dampen enthusiasm for homebuying, which could slow home construction and the home-improvement industry. Lower rates have been great for those borrowing money -- for school, cars, and even for credit card use. So rising rates are bad, right?
Not entirely. There's an upside, too. Higher rates may be bad for borrowers, but they're good for lenders, which is what you are when you park your money in a bank account. (Banks take money in, pay depositors interest, and then lend money out at higher interest rates.)
So if you've been frustrated at only earning a fraction of a percent in interest on your savings or checking account, rejoice -- many experts agree that interest rates essentially have nowhere to go but up, and a recent report from Bankrate.com is already pointing to rising rates. Rates on certificates of deposit (CDs), for example, have been creeping up as the market anticipates Alan Greenspan and Co. upping rates later this month and perhaps throughout the rest of the year. The yield on the average five-year CD jumped to almost 3.5% recently, which is the highest it has been in almost two years. Meanwhile, the average six-month CD rate hit 1% for the first time in a year.
Note that those are just average rates. You can do even better by engaging in a little research. Check with your local savings institutions (but avoid these common banking mistakes), do a little digging online, and learn more about short-term and emergency savings in our Savings Center, which also features some special interest rates for Fools. Mathew Emmert's article on how to optimize short-term investments may also be of interest. Banks you might look into include Wells Fargo
And while you're at it, look into brokerages, too, to see whether a different one will serve you better. Some brokerages work like banks (or are banks), offering checking services, money market investing, and more. Learn all about brokerages in our Broker Center, and you may end up paying less in commissions the next time you snap up shares of stock.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.