NEW YORK (CNN/Money) - I have approximately $20,000 invested in a six-month certificate of deposit paying about 2 percent, but I'm hoping I can I do better. What is the best CD out there?

-- Judith Mason, Park Ridge, New Jersey

Well, for my money, the best CD out there is still The Beatles' 1969 "Abbey Road" album because it...Oh, wait a minute, you mean CD as in certificate of deposit. In that case, let me start over.

What with the boys at the Federal Reserve chopping at short-term interest rates over the past year, there's no doubt that CD rates have been going down, down, down. Just over the last six months, for example, the national average for six-month CDs has dropped from 3.5 percent to 2 percent, the rate you're currently getting.

There's nothing that you personally can do about this trend, although I would expect that as the economy recovers short-term rates will start to rise once again. And, while I wouldn't go so far as to say there's a way for you to find the "best" CD -- I'm sure that no matter which bank claims to have the best deal, there will be some other that pays a tiny bit more interest or has better terms in some other way -- there are a few steps you can take to make sure you're getting something better than the average rate.

Your first move is to go to the Banking & Borrowing section of the CNN/Money Personal Finance area. Scroll down a bit and you'll find a pull-down menu that allows you to screen for the best CDs by term.

Select six-month CDs and boom! You immediately get a list of six-month CDs from several dozen banks around the country ranked by their Annual Percentage Yield or APY. (Remember, in the case of a CD with less than a year's term, the APY assumes you'll get the quoted rate for a full year. In fact, the renewal rate may be higher or lower than the initial rate, depending on whether interest rates have risen or dropped in the meantime.)

When I went through this exercise recently, Legacy Bank of Hinton, Oklahoma and USAccess Bank of Louisville, Kentucky both offered the highest APY at 2.86 percent. To get this rate at Legacy, however, you had to be willing to deposit at least $10,000, while USAccess required a deposit of just $500. The table lists the initial deposit requirement for each bank as well as the phone number so you can call to get details on where to send your money. In some cases, the banks have a hypertext link that takes you to the bank's home page so you can apply for the CD online.

Your next move is to see whether you might do better by investing in something other than -- or in addition to -- a six-month CD. For example, by sticking with CDs but accepting a longer term, you can grab a higher rate. The top one-year CDs at the site were paying 3.3 percent, for example. And if you were flexible enough to go a three-year term, the rate increased to 4.9 percent. Of course, if you buy a three-year CD now and interest rates begin climbing again as the economic recovery takes hold, you could be stuck in what amounts to a below market rate later on.

One way to take advantage of higher rates on longer-term CDs while still hedging against possible rate increases is to build a CD ladder, or a group of CDs with staggered maturities, say, six months through three years. When the CD with the shortest term comes due, you roll the proceeds over into a CD with the longest term in the ladder. If you set up the ladder correctly, you'll always have CD money coming due, which means you'll always be able to reinvest at least some of your money at current rates. For details on building a CD ladder, click here.

If you're willing to take a bit more risk with your money, you might also want to consider putting some of the money you would normally devote to CDs into short-term bond funds. These are funds that typically buy bonds with maturities of two to four years. You can often get a little higher yield with these than you can with CDs.

Recently, for example, top short-term bond funds were yielding more than 4 percent. You should also know, however, that if interest rates increase, the share price of these funds will decline. Usually, these funds hold up pretty well so that the interest they pay offsets any share-price decline. But losses are possible. When interest rates rose in 1994, for example, short-term bond funds lost nearly 1 percent of their value.

If you feel comfortable with the idea of putting perhaps a portion of your money in short-term bond funds, check out the Funds section of Morningstar.com. There, you can not only learn more about how these portfolios work, but you can also screen for specific funds that have good track records. On the other hand, if the idea of making the leap from CDs to funds is too much for you, then you've at least got the option of screening and then building a ladder of top-yielding CDs.

MORE ASK THE EXPERT       Ask the Expert Ask the Expert: Investing

One final note: when the economic recovery really takes hold -- and the way things are looking, that day might not be far away -- interest rates should begin moving up again. Indeed, some economists worry that if the economy recovers too quickly, Alan "Span the Man" Greenspan might actually begin raising short-term rates as early as mid-year. I wouldn't focus my investing strategy on that possibility, but it's not a bad idea to also have a bit of your cash in a money-market fund. Since money funds invest in debt obligations with very short-term maturities, their yields will increase as rates go up.

What's more, these funds have a great track record of holding their $1 share price even in the face of some steep rate hikes. Thus, keeping some of your cash in a money fund will allow you to take advantage of rising rates up without putting your principal at any significant risk. To search for high money fund yields, check out the imoneynet site.