Most banks offer CDs with maturities of three months to five years. Usually, the longer the CD, the higher the yield. But going out longer than five years wouldn't be very rewarding now, says Bank Rate Monitor, because many banks pay the exact same yield for seven years as they do for five. In fact, more than half of the country's 100 largest banks offer nothing beyond five years.

"But why even think about locking up your cash for that long? Investing in FDIC-insured bank CDs is a matter of safety and timing. When interest rates are rising, you should purchase short-term CDs so you'll catch a higher yield at rollover time. But in a declining-rate environment, the wisest course is to buy longer-term CDs to protect your yield."Bank Rate Monitor explains why with the following hypothetical examples.

"First, let's use average yields of 5.17 percent for the one-year CD and 5.68 percent for the five-year (recent yields are somewhat lower). Assume that both accounts pay simple interest, which means the interest isn't compounded. If you have $10,000 to invest, the five-year account would earn $2,840 over five years. But if interest rates were to rise by one-half percent a year, and if you renewed the one-year CD each year at the prevailing rate, you'd earn a total of $4,423 by the year 2002.

"Now let's pretend that instead of signing up for average CDs, you scouted-out the highest-yielding accounts in the country. They pay about 1 percentage point higher, so your earnings would be greater. Your interest with a one-year CD would grow to $5,293 over five years, vs. $3,325 with the top-paying five-year CD. That's the argument for going short.

"But suppose interest rates go the other way - assume they drop by 1/2 percent a year for the next five years. On that same $10,000, using average rates, you'd earn a total of $2,592 with the one-year CD that you keep rolling over annually, compared with $2,840 on the five-year you lock into now."

Many investors with a lot of extra money don't look beyond the safety factor when they string out their CD purchases over very long periods, notes BRM. Others keep too much money in 2-percent passbook or money market accounts. If you fall into this category, BRM says you could do much better with a little homework and by watching interest-rate cycles.

"You should currently go short - six months to a year at most - unless you're convinced that interest rates will plunge between now and the millennium and beyond," according to Bank Rate Monitor of North Palm Beach, Fla.