NEW YORK - Americans want to be close to their cash.

People are bailing out of bank certificates of deposit and parking their cash in checking and savings accounts that earn little or no interest but also don't exact penalties for early withdrawal.

It's another signal of how nervous Americans are about their finances as the U.S. economy struggles. Consumers are stuck with few options to make their money work. The Standard & Poor's 500 is down 0.5 percent for the year, one big reason why people have pulled a net $145.3 billion out of mutual funds in the first eight months of the year, according to Lipper Inc.

"At times of uncertainty, there is a natural human tendency to stay liquid and have money easily accessible," says Dan Geller, executive vice president at financial data analysis firm Market Rates Insight.

The firm's analysis of domestic banks insured by the Federal Deposit Insurance Corporation, found CD deposits declined by $200 billion in the first six months of the year. Deposits in checking, savings and money market accounts rose by $171 billion.

A CD commonly carries an interest rate for a fixed term ranging from three months to five years. Depositors typically pay a penalty if they withdraw their money prior to the end of the CD's term.

A big part of the blame for the shift in money: The interest rates people can earn are at historic lows. The national average rate for deposits decreased from 1.20 percent to 0.99 percent in the first half of 2010. It was the first time the measure fell below 1 percent since the 1950s, according to Market Rates Insight.

"Interest rates on short-term instruments like CDs are so low, why bother when you can leave money in the bank?" says Martin Feldstein, professor of economics at Harvard University.

Andrea Perez, a 34-year-old New York resident, placed $15,000 of her savings in a CD two years ago that yielded about 5 percent. When the CD matured recently, she moved the money to a checking account because she didn't think the new rate of 1 percent was worth it.

"I just switched jobs and wanted to make sure that I had easy access to cash," she says.

Things could be looking up though. The yield on the 10-year U.S. Treasury bond just in the first 10 days of September increased to 2.80 percent from 2.48 percent.

For now, beaten down consumers have already shunned spending. The Federal Reserve's latest data showed consumer spending at retail stores in key cities such as New York, Atlanta and Dallas either slowed or declined in July and August. Nationwide, credit card use dropped for a 23rd consecutive month in July, and overall borrowing dropped at an annual rate of $3.6 billion, the 17th drop in the past 18 months.

As American households spend less, chances of higher economic activity and a healthy recovery continues to diminish. It's no surprise that overall deposits in U.S. banks fell for two consecutive quarters for the first time in two decades.

"As consumers stop borrowing, money stops flowing around the economy and deposits start to shrink," says Sherief Meleis, managing director at New York-based management consultant Novantas.

Allen Tischler, vice president at Moody's Investors Service banking team, says the drop in deposits is partly the result of a deliberate effort by banks to save money.

Many of the weaker banks that don't exist any more, like National City and Washington Mutual, wrote high interest CDs during the financial crisis in 2008 to attract cash to overcome their own liquidity crunch. However, these banks were acquired by PNC Bank and JP Morgan Chase, and those CDs aren't being rolled over now because the new ones offer much lower interest rates.

Of course, interest rates are so low in part because of government policy.

The U.S. Federal Reserve has championed rock-bottom rates in the hope that they would prompt companies and consumers to borrow and spend again. Ironically, they're also adding to consumers' anxiety.