When interest rates are very low, it's difficult to find a single certificate of deposit (CD) offering a significantly higher rate of return than other CDs. There are a number of factors that affect CD-generated income, and CD investors can take steps to maximize their returns on investment.

What makes CDs attractive as an investment vehicle is not their rate of return but their risk-free nature. Depending on the financial institution offering them, CDs are insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), and there are few safer instruments available for the average investor.

Minimum amounts for CDs are typically $500, and minimum terms are 30 days, although the majority of CDs mature somewhere between six months and five years. Larger deposits and longer terms earn higher interest rates. The interest rates available on CDs are usually just a bit higher than the current inflation rate as determined by the consumer price index (CPI), so virtually any rate higher than that is a good deal. Online banks and credit unions often offer slightly higher interest rates than traditional brick-and-mortar firms.

Maximizing Your Rate of Return

Check the interest calculation and payment schedule carefully. The advantage of having interest calculated and compounded more frequently adds up over time, so look for a CD that offers more than just annual compounding.

While CDs are traditionally a fixed-rate investment, variable-rate CDs do exist. If you think interest rates are likely to rise significantly, you can benefit from a certificate whose interest rate is adjusted during the term of the CD.

Indexed or structured CDs offer you the chance to earn a percentage of the return on a stock index or commodity index. This can result in a much higher return than a traditional CD's – and for more risk as well.