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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

1.19%
Rate
1.20%
APY
$1
Min to earn APY

Advertiser Comments

  • Great Rates + Safety = Peace of Mind
  • Member FDIC
1.19%
Rate
1.20%
APY
$0
Min to earn APY

Advertiser Comments

  • A rate that's 15x better than the national average
  • No minimum balance and no hidden fees
  • Link directly to any existing bank account
1.14%
Rate
1.15%
APY
$0
Min to earn APY

Advertiser Comments

  • Consistently Competitive Rates
  • 24/7 Customer Care
  • Ally Bank, Member FDIC
1.14%
Rate
1.15%
APY
$0
Min to earn APY

Advertiser Comments

  • 100% U.S. Based Customer Service
  • No monthly minimum balance, no monthly fees
  • Open in Minutes
Ultima Bank
Minimum to earn APY $0
2.02% APY
Rates as of 2017-08-11
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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Dollar Savings Direct
Minimum to earn APY $0
1.40% APY
Rates as of 2017-08-10
Advertiser Comments
Dollar Savings Account - apply online- must have a personal checking account in a US See morebank.

Type: Savings

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BankDirect
Minimum to earn APY $10,000
1.35% APY
Rates as of 2017-08-16
Advertiser Comments
BankDirect Online Money Market - Tier $10,000 and greater

Type: MMA

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ableBanking
Minimum to earn APY $0
1.30% APY
Rates as of 2017-08-16
Advertiser Comments
Money Market Savings - up to 6 withdrawals are permitted per month - apply online See more- a division of Northeast Bank based in Maine

Type: MMA

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UFB Direct
Minimum to earn APY $50,000
1.30% APY
Rates as of 2017-08-11
Advertiser Comments
UFB Premium Savings Account offers a rate of 1.30% APY with interest compounded daily - See moreAPY for balances $50,000 and above - Must be new funds to receive stated rate

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
1.30% APY
Rates as of 2017-08-11
Advertiser Comments
Nationwide - Apply online

Type: MMA

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CIT Bank
Minimum to earn APY $1
1.30% APY
Rates as of 2017-08-16
Advertiser Comments
CIT Bank Savings - APY for daily balances $1 to $100,000 - Apply online

Type: Savings

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Salem Five Direct
Minimum to earn APY $0
1.25% APY
Rates as of 2017-08-11
Advertiser Comments
eOne Savings - APY on balances up to $500,000. Companion account to eOne Checking, no See moreminimum 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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SFGI Direct
Minimum to earn APY $1
1.21% APY
Rates as of 2017-08-11

Type: Savings

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Popular Direct
Minimum to earn APY $0
1.21% APY
Rates as of 2017-08-11
Advertiser Comments
Popular Direct Savings - $4 monthly fee waived with $500 minimum daily balance

Type: Savings

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EverBank
Minimum to earn APY $0
1.21% APY
Rates as of 2017-08-10
Advertiser Comments
Yield Pledge Money Market - APY for all balances

Type: MMA

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Radius Bank
Minimum to earn APY $2,500
1.20% APY
Rates as of 2017-08-11
Advertiser Comments
Radius High-Yield Savings - APY for balances $2,500 and above - apply online

Type: Savings

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American Express
Minimum to earn APY $0
1.15% APY
Rates as of 2017-08-16
Advertiser Comments
High-Yield Savings - Bank by phone or online only.

Type: Savings

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SmartyPig
Minimum to earn APY $10,000
1.15% APY
Rates as of 2017-08-11
Advertiser Comments
SmartyPig Savings - Tier $10,000.01 - $50,000

Type: Savings

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FNBO Direct
Minimum to earn APY $0
1.10% APY
Rates as of 2017-08-11
Advertiser Comments
Online Savings Act - Rated Kiplinger's Best Online Savings Account, no minimums, no monthly fees, See moremanage accounts securely online

Type: Savings

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Capital One 360
Minimum to earn APY $10,000
1.10% APY
Rates as of 2017-08-16
Advertiser Comments
360 Money Market - Tier $10,000 or more

Type: MMA

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SmartyPig
Minimum to earn APY $0
1.05% APY
Rates as of 2017-08-11
Advertiser Comments
SmartyPig Savings - Tier $0.01 - $2,500

Type: Savings

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SmartyPig
Minimum to earn APY $2,500
1.05% APY
Rates as of 2017-08-11
Advertiser Comments
SmartyPig Savings - Tier $2500.01 - $10,000

Type: Savings

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AloStar Bank of Commerce
Minimum to earn APY $0
1.05% APY
Rates as of 2017-08-16
Advertiser Comments
Limit of six transactions per month - apply online

Type: Savings

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Dollar Bank Federal Savings Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-08-10
Advertiser Comments
Everything Savings - 1.00% APY on balances $20,000 and below when linked with an See moreEverything Checking Account. The rates require Everything Checking with six qualifying monthly posted payments for example: check, Online Banking bill payment, Telephone Banking bill payment, ACH debit, Point-of-Sale transactions (signature or PIN based).- Open online and mail in forms. Available in Pennsylvania, and Ohio market area. Rate collected within: 15222 (PA)

Type: Savings

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iGOBanking
Minimum to earn APY $0
1.00% APY
Rates as of 2017-08-11
Advertiser Comments
iGO Online Savings

Type: Savings

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Ultima Bank
Minimum to earn APY $1,000
1.00% APY
Rates as of 2017-08-11
Advertiser Comments
UBM Direct Savings Account

Type: Savings

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Biscayne Bank
Minimum to earn APY $1
1.00% APY
Rates as of 2017-08-16
Advertiser Comments
Regular Savings - Maintain $1,000 balance each day and avoid a $25 monthly maintenance fee See more- Miami-Dade County, Florida market area only

Type: Savings

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Main Street Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-08-11
Advertiser Comments
Kasasa Saver - Must be linked to a free Kasasa Cash or Kasasa Cash Back See morechecking account - 1.00% APY on balances up to $50,000 - No minimum balances - No monthly service fee

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
1.00% APY
Rates as of 2017-08-11
Advertiser Comments
High-Yield Savings - No minimum balance and no monthly service fees - Nationwide - Apply See moreonline

Type: Savings

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MySavingsDirect
Minimum to earn APY $0
1.00% APY
Rates as of 2017-08-11
Advertiser Comments
MySavings Account

Type: Savings

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UFB Direct
Minimum to earn APY $25,000
1.00% APY
Rates as of 2017-08-11
Advertiser Comments
UFB Direct High-Yield Savings - Tier $25,000 and above - No monthly maintenance fee

Type: Savings

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First Internet Bank
Minimum to earn APY $0
0.90% APY
Rates as of 2017-08-11
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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The Palladian Private Bank
Minimum to earn APY $0
0.90% APY
Rates as of 2017-08-11
Advertiser Comments
Currently there is a promotional interest rate for Palladian Savings Account which is fixed at See more1.30% for the first six months. After the promotional interest rate ends, the interest rate will be the non-promotional variable interest rate that is offered for Palladian Savings Account at that time (currently 0.90%). There is a minimum initial deposit of $1,000 and maximum initial deposit of $100,000.

Type: Savings

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Chesapeake Bank
Minimum to earn APY $1
0.90% APY
Rates as of 2017-08-02
Advertiser Comments
Clear Sky Savings - Tier $1 - $249,999

Type: Savings

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Colorado Federal Savings Bank
Minimum to earn APY $2,500
0.85% APY
Rates as of 2017-08-16
Advertiser Comments
High Yield Savings - You may access your funds only through ACH (ACH fee applies)

Type: Savings

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EH National Bank
Minimum to earn APY $100,000
0.85% APY
Rates as of 2017-08-10
Advertiser Comments
Premium Money Market - Tier $100,000 and over

Type: MMA

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EH National Bank
Minimum to earn APY $0
0.81% APY
Rates as of 2017-08-10
Advertiser Comments
Premium Money Market - Tier $0 - $99,999.99

Type: MMA

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Virtual Bank
Minimum to earn APY $0
0.80% APY
Rates as of 2017-08-11
Advertiser Comments
eMoney Market online account

Type: MMA

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Virtual Bank
Minimum to earn APY $10,000
0.80% APY
Rates as of 2017-08-11
Advertiser Comments
eMoney Market online account

Type: MMA

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Virtual Bank
Minimum to earn APY $25,000
0.80% APY
Rates as of 2017-08-11
Advertiser Comments
eMoney Market online account

Type: MMA

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Amboy Direct
Minimum to earn APY $3,000
0.80% APY
Rates as of 2017-08-16
Advertiser Comments
eSavings - Apply online or by mail, offer not available at branches.

Type: Savings

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EH National Bank
Minimum to earn APY $0
0.79% APY
Rates as of 2017-08-10
Advertiser Comments
Personal Savings - Must maintain a $1000 balance to avoid monthly $10 fee

Type: Savings

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Mutual of Omaha Bank
Minimum to earn APY $1,000
0.77% APY
Rates as of 2017-08-11
Advertiser Comments
Online Money Market - Rate/APY for balances from $1,000 - $1,000,000

Type: MMA

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Bank of Internet
Minimum to earn APY $1
0.75% APY
Rates as of 2017-08-16
Advertiser Comments
Money Market Savings Account - No monthly maintenance fees - No minimum monthly balance requirements

Type: MMA

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California First National Bank
Minimum to earn APY $0
0.75% APY
Rates as of 2017-08-16
Advertiser Comments
Money Market Checking - Tier Up to $14,999.99

Type: MMA

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Workers' Credit Union
Minimum to earn APY $50
0.75% APY
Rates as of 2017-08-09
Advertiser Comments
cuSave - Online Savings - Membership is limited to residents of Massachusetts or New Hampshire See moreor those who work for a company that is based in Massachusetts

Type: Savings

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Nationwide Bank
Minimum to earn APY $100,000
0.75% APY
Rates as of 2017-08-11
Advertiser Comments
Tiered Money Market - tier $100,000 - apply online

Type: MMA

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TIAA Direct
Minimum to earn APY $50,000
0.75% APY
Rates as of 2017-08-11
Advertiser Comments
Money Market -Tier $50,000 -$99,999

Type: MMA

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Capital One 360
Minimum to earn APY $0
0.75% APY
Rates as of 2017-08-16
Advertiser Comments
360 Savings Account - No fees - No minimum balance - Online account

Type: Savings

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Century Bank Direct
Minimum to earn APY $0
0.74% APY
Rates as of 2017-08-16
Advertiser Comments
Online MM Rate - Apply online

Type: MMA

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