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Money market accounts vs. CDs: Which to choose?

Whether you're saving for your retirement or looking for a safe yet liquid place to keep your money between major investments, money market accounts and certificates of deposit--often called CDs--may both be good choices--but they have key differences.

If you are comparing money market accounts vs. CDs, here are the main differences and why you'd choose one over the other.

Money market accounts offer high interest and security

Available from nearly any bank, money market accounts provide the security and liquidity of traditional savings accounts but usually at a higher average rate. In exchange, money market accounts typically have certain requirements, such as a minimum deposit amount and limits on withdrawals.

Money market accounts are very secure: Like a savings account, they are guaranteed by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per institution.

CDs: safe but locked up

Certificates of deposit are also protected by the FDIC but otherwise differ significantly from money market accounts.

While it's possible to withdraw money from a money market account with no penalty, CDs are locked in for a fixed term--which could be as little as 1 to 6 months or as long as 7 years or more--with penalties if you withdraw before the term is up. Once you fund a CD, you can't pull out your money without a steep penalty.

In money market accounts vs. CDs decision, money market wins for many situations

So which option wins in the contest between money markets vs. CDs? That depends on your circumstances, your need for liquidity and the interest rates offered on each. In general, however, money market accounts are a wiser choice if you aren't absolutely sure that you can leave your cash locked away for a certain amount of time.

What's more, even though you might be tempted to choose a CD for a slightly higher rate when deciding between money market accounts vs. CDs, you may actually be in a better position if you think interest rates will rise in the future.

That's because interest rates on money market accounts fluctuate with the market, while CD rates are locked in when you fund a CD. If interest rates rise, the money market rate will also rise but the CD rate will not (unless you have a special CD with floating terms).

In the comparison between money markets vs. CDs, money market accounts win out for most scenarios. With comparable average interest rates and easier access to your cash, money market accounts come out ahead and are a smart choice for experienced and casual investors alike.

Money Market Rates

Ultima Bank Minnesota
Minimum to earn APY $0
2.78% APY
Rates as of 2018-12-10
Advertiser Comments
SMART Savings Account - for young adults 18 yrs or younger, withdrawals prior to 18th See morebirthday may result in a penalty

Type: Savings

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MySavingsDirect
Minimum to earn APY $0
2.40% APY
Rates as of 2018-12-12
Advertiser Comments
MySavings Account

Type: Savings

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Popular Direct
Minimum to earn APY $0
2.36% APY
Rates as of 2018-12-10
Advertiser Comments
Popular Direct Plus Savings - $4 monthly fee waived with $500 minimum daily balance

Type: Savings

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MemoryBank
Minimum to earn APY $0
2.30% APY
Rates as of 2018-12-12
Advertiser Comments
Online Money Market - APY for balances $0.01 - $1,000,000

Type: MMA

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Northpointe Bank
Minimum to earn APY $25,000
2.30% APY
Rates as of 2018-12-12
Advertiser Comments
Ultimate Money Market - $25,000 - $1,000,000

Type: MMA

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Vio Bank
Minimum to earn APY $100
2.27% APY
Rates as of 2018-12-10
Advertiser Comments
High Yield Online Savings Account - No monthly service fee - Interest is compounded daily See more- 6 free withdrawals per monthly statement cycle

Type: Savings

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All America Bank
Minimum to earn APY $0
2.25% APY
Rates as of 2018-12-12
Advertiser Comments
Mega Money Market - Online account

Type: MMA

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Citizens Access
Minimum to earn APY $5,000
2.25% APY
Rates as of 2018-12-12
Advertiser Comments
Online Savings Account - Tier $5,000 and above - No monthly service fees

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
2.20% APY
Rates as of 2018-12-10
Advertiser Comments
Nationwide - Apply online

Type: MMA

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CIBC Bank USA
Minimum to earn APY $0
2.16% APY
Rates as of 2018-12-12
Advertiser Comments
CIBC Agility Savings - APY for balances up to $250,000

Type: Savings

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TIAA Direct
Minimum to earn APY $0
2.15% APY
Rates as of 2018-12-12
Advertiser Comments
1 Year Introductory APY - Yield Pledge Money Market - For first-time Yield Pledge Money See moreMarket account holders, for eligible balances (i) up to $250,000, a fixed, 1-year introductory APY of 2.15% applies, and (ii) from $250,000.01 to $10,000,000, a blended APY, based on the fixed, 1-year introductory APY described above and the applicable variable ongoing APY

Type: MMA

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Sallie Mae Bank
Minimum to earn APY $0
2.10% APY
Rates as of 2018-12-10
Advertiser Comments
High-Yield Savings - No minimum balance and no monthly service fees - Nationwide - Apply See moreonline

Type: Savings

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SFGI Direct
Minimum to earn APY $1
2.07% APY
Rates as of 2018-12-10
Advertiser Comments
SFGI Direct Savings - Online account

Type: Savings

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Salem Five Direct
Minimum to earn APY $0
2.05% APY
Rates as of 2018-12-10
Advertiser Comments
eOne Savings - APY on balances of 0.01- $1,000,000 - Companion account to eOne Checking, See moreno minimum balance, no monthly fees, free ATM card - Online applicants only, who do not have existing deposit accounts with Salem Five

Type: Savings

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Goldman Sachs Bank USA
Minimum to earn APY $1
2.05% APY
Rates as of 2018-12-09
Advertiser Comments
GS Online Savings - No transaction fees - No minimum deposit to open - FDIC See moreinsurance up to the maximum allowed by law

Type: Savings

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Barclays
Minimum to earn APY $0
2.05% APY
Rates as of 2018-12-12
Advertiser Comments
Online Savings - APY for all balances

Type: Savings

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Synchrony Bank
Minimum to earn APY $0
2.05% APY
Rates as of 2018-12-12
Advertiser Comments
High Yield Savings - APY for balances up to $4,999.

Type: Savings

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Synchrony Bank
Minimum to earn APY $5,000
2.05% APY
Rates as of 2018-12-12
Advertiser Comments
High Yield Savings - APY for balances between $5,000- $24,999.

Type: Savings

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Synchrony Bank
Minimum to earn APY $25,000
2.05% APY
Rates as of 2018-12-12
Advertiser Comments
High Yield Savings - APY for balances $25,000 and above.

Type: Savings

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Incredible Bank
Minimum to earn APY $25,000
2.02% APY
Rates as of 2018-12-10
Advertiser Comments
High Yield Online Savings - Tier $25,000 and above

Type: Savings

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Beal Bank, USA
Minimum to earn APY $25,000
2.01% APY
Rates as of 2018-12-12
Advertiser Comments
Money Market - $25,000 and more

Type: MMA

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Ally Bank
Minimum to earn APY $0
2.00% APY
Rates as of 2018-12-12
Advertiser Comments
Online Savings - APY for all balances - Free online transactions, no monthly fees, no See moreminimums - Apply online - Rate collected within: CA

Type: Savings

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FNBO Direct
Minimum to earn APY $0
2.00% APY
Rates as of 2018-12-08
Advertiser Comments
Online Savings - APY for all balances - No minimums, no monthly fees, manage account See moresecurely online

Type: Savings

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Discover Bank
Minimum to earn APY $0
2.00% APY
Rates as of 2018-12-15
Advertiser Comments
Online Savings Account - No monthly fee and no minimum required balance

Type: Savings

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Capital One
Minimum to earn APY $10,000
2.00% APY
Rates as of 2018-12-12
Advertiser Comments
360 Money Market - Tier $10,000 or more

Type: MMA

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Cadence Bank, N.A.
Minimum to earn APY $0
2.00% APY
Rates as of 2018-12-12
Advertiser Comments
Propel Savings - Tier $0-$5,000 - Requires recurring auto-deposit from Cadence checking of at least See more$25 in aggregate monthly

Type: Savings

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Alliant Credit Union
Minimum to earn APY $0
2.00% APY
Rates as of 2018-12-12
Advertiser Comments
Alliant Savings - APY for all balances - Must be an Alliant CU member

Type: Savings

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Chesapeake Bank
Minimum to earn APY $1,000
2.00% APY
Rates as of 2018-12-12
Advertiser Comments
Money Market - APY for balances $1,000 and above

Type: MMA

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Radius Bank
Minimum to earn APY $25,000
1.96% APY
Rates as of 2018-12-10
Advertiser Comments
Radius High-Yield Savings - APY for balances $25,000 and above

Type: Savings

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Northpointe Bank
Minimum to earn APY $25,000
1.95% APY
Rates as of 2018-12-12
Advertiser Comments
Ultimate Savings - Tier $25,000 - $1,000,100

Type: Savings

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iGOBanking
Minimum to earn APY $0
1.90% APY
Rates as of 2018-12-10
Advertiser Comments
iGO Online Savings - APY for all balances

Type: Savings

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BankPurely
Minimum to earn APY $0
1.90% APY
Rates as of 2018-12-12
Advertiser Comments
SavingPurely - Zero monthly fees - One tree will be planted for every SavingPurely account See moreopened

Type: Savings

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E*Trade Bank
Minimum to earn APY $0
1.90% APY
Rates as of 2018-12-15
Advertiser Comments
Premium Savings Account - An average monthly balance of $1,000 is required to avoid a See more$10 monthly fee

Type: Savings

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Discover Bank
Minimum to earn APY $0
1.85% APY
Rates as of 2018-12-15
Advertiser Comments
Money Market Tier $0 - $99,999.99 - $10 montly fee if average daily balance is See moreless than $2,500

Type: MMA

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ableBanking
Minimum to earn APY $0
1.85% APY
Rates as of 2018-12-12
Advertiser Comments
Money Market Savings - APY for all balances - Up to 6 withdrawals are permitted See moreper month - apply online - a division of Northeast Bank based in Maine

Type: MMA

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Beal Bank
Minimum to earn APY $25,000
1.85% APY
Rates as of 2018-12-12
Advertiser Comments
Money Market - $25,000 and up - Rate collectted within 94104 (N CA) Beal Bank, See moreSSB

Type: MMA

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CIT Bank
Minimum to earn APY $100
1.85% APY
Rates as of 2018-12-12
Advertiser Comments
CIT Bank Money Market - APY for balances $100 and above

Type: MMA

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MyBankingDirect
Minimum to earn APY $25,000
1.85% APY
Rates as of 2018-12-12
Advertiser Comments
Online Money Market - Tier $25,000 and above - No monthly account maintenance fees

Type: MMA

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First Internet Bank
Minimum to earn APY $0
1.81% APY
Rates as of 2018-12-15
Advertiser Comments
Money Market Savings - Rate earned on balances from $0 to $250,000 - Transaction limitations See more- apply online

Type: MMA

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Dollar Savings Direct
Minimum to earn APY $0
1.80% APY
Rates as of 2018-12-15
Advertiser Comments
Dollar Savings Account - Apply online - Must have a linked personal checking account in See morea US bank

Type: Savings

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SmartyPig
Minimum to earn APY $0
1.75% APY
Rates as of 2018-12-10
Advertiser Comments
SmartyPig Savings - Tier $0.01 - $2,500

Type: Savings

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SmartyPig
Minimum to earn APY $10,000
1.75% APY
Rates as of 2018-11-23
Advertiser Comments
SmartyPig Savings - Tier $10,000.01 - $50,000

Type: Savings

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SmartyPig
Minimum to earn APY $2,500
1.75% APY
Rates as of 2018-11-23
Advertiser Comments
SmartyPig Savings - Tier $2500.01 - $10,000

Type: Savings

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Quorum Federal Credit Union
Minimum to earn APY $0
1.75% APY
Rates as of 2018-12-10
Advertiser Comments
HighQ Savings - No monthly fee and no balance minimums

Type: Savings

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Green Bank
Minimum to earn APY $0
1.70% APY
Rates as of 2018-12-09
Advertiser Comments
Personal Money Market Promotion - Limited-time offer - Available to personal accounts only - Funds See morenot currently on deposit with Green Bank required - After the one-year fixed rate period, your APY will revert to the APY in effect for Green Money Market account - $5,000 minimum daily balance required to avoid $15 monthly service charge

Type: MMA

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UFB Direct
Minimum to earn APY $0
1.60% APY
Rates as of 2018-12-10
Advertiser Comments
UFB Direct High-Yield Money Market - APY for all balances - $10 monthly maintenance fee See morewaived with a minimum $5,000 average daily collected balance - Apply online

Type: MMA

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Amalgamated Bank
Minimum to earn APY $0
1.60% APY
Rates as of 2018-12-12
Advertiser Comments
Online Savings Promotion - No monthly maintenance fees

Type: Savings

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East Boston Savings Bank
Minimum to earn APY $10,000
1.57% APY
Rates as of 2018-12-15
Advertiser Comments
Money Market Special 3 - Tier $10,000 to less than $2,000,000

Type: MMA

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CIT Bank
Minimum to earn APY $0
1.55% APY
Rates as of 2018-12-12
Advertiser Comments
CIT Premier High-Yield Savings - Tier Less than $250,000 - No account opening or maintenance See morefees - Apply online

Type: Savings

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Amboy Direct
Minimum to earn APY $3,000
1.51% APY
Rates as of 2018-12-12
Advertiser Comments
e-Savings - Tier $3,000 - $100,000

Type: Savings

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