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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
Minimum to earn APY $0
2.28% APY
Rates as of 2018-05-20
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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Popular Direct
Minimum to earn APY $0
2.00% APY
Rates as of 2018-05-13
Advertiser Comments
Popular Direct Exclusive Savings - - $4 monthly fee waived with $500 minimum daily See morebalance

Type: Savings

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Salem Five Direct
Minimum to earn APY $0
1.85% APY
Rates as of 2018-05-20
Advertiser Comments
eOne Savings - APY on balances of 0.01- $1,000,000. 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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CIT Bank
Minimum to earn APY $100
1.85% APY
Rates as of 2018-05-24
Advertiser Comments
CIT Bank Money Market - APY for balances $100 and above

Type: MMA

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Dollar Savings Direct
Minimum to earn APY $0
1.80% APY
Rates as of 2018-05-23
Advertiser Comments
Dollar Savings Account - apply online- must have a personal checking account in a US See morebank.

Type: Savings

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All America Bank
Minimum to earn APY $0
1.75% APY
Rates as of 2018-05-23
Advertiser Comments
Mega Money Market - Online account

Type: MMA

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Goldman Sachs Bank USA
Minimum to earn APY $1
1.70% APY
Rates as of 2018-05-24
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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ableBanking
Minimum to earn APY $0
1.70% APY
Rates as of 2018-05-23
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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CIBC
Minimum to earn APY $0
1.65% APY
Rates as of 2018-05-23
Advertiser Comments
CIBC Agility Savings - APY for balances up to $250,000

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
1.65% APY
Rates as of 2018-05-20
Advertiser Comments
Nationwide - Apply online

Type: MMA

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Barclays
Minimum to earn APY $0
1.65% APY
Rates as of 2018-05-23
Advertiser Comments
Online Savings - APY for all balances

Type: Savings

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Synchrony Bank
Minimum to earn APY $0
1.65% APY
Rates as of 2018-05-20
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
1.65% APY
Rates as of 2018-05-20
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
1.65% APY
Rates as of 2018-05-20
Advertiser Comments
High Yield Savings - APY for balances $25,000 and above.

Type: Savings

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SFGI Direct
Minimum to earn APY $1
1.61% APY
Rates as of 2018-05-20
Advertiser Comments
SFGI Direct Savings - Online account

Type: Savings

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Ally Bank
Minimum to earn APY $0
1.60% APY
Rates as of 2018-05-23
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
1.60% APY
Rates as of 2018-05-24
Advertiser Comments
Online Savings - Rated Kiplinger's Best Online Savings Account - No minimums, no monthly fees, See moremanage account securely online

Type: Savings

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Discover Bank
Minimum to earn APY $0
1.60% APY
Rates as of 2018-05-25
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
1.60% APY
Rates as of 2018-05-23
Advertiser Comments
360 Money Market - Tier $10,000 or more

Type: MMA

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UFB Direct
Minimum to earn APY $0
1.60% APY
Rates as of 2018-05-20
Advertiser Comments
UFB Direct Money Market Savings Account - No monthly maintenance fee with a minimum $5,000 See moreaverage daily collected balance; otherwise, the fee is $10.00 per month - Apply online

Type: MMA

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Amalgamated Bank
Minimum to earn APY $0
1.60% APY
Rates as of 2018-05-23
Advertiser Comments
Online Savings - The promotional APY is available for the first 12 months from account See moreopening on the entire balance, and may be changed or withdrawn at any time without notice - No monthly maintenance fees

Type: Savings

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Sallie Mae Bank
Minimum to earn APY $0
1.55% APY
Rates as of 2018-05-20
Advertiser Comments
High-Yield Savings - No minimum balance and no monthly service fees - Nationwide - Apply See moreonline

Type: Savings

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CIT Bank
Minimum to earn APY $0
1.55% APY
Rates as of 2018-05-23
Advertiser Comments
CIT Bank Savings - Premier High Yield - Tier $0 - $250,000 - Apply online

Type: Savings

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Nationwide Bank
Minimum to earn APY $10,000
1.55% APY
Rates as of 2018-05-20
Advertiser Comments
Tiered Money Market - tier $10,000 - $24,999 - apply online

Type: MMA

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Nationwide Bank
Minimum to earn APY $25,000
1.55% APY
Rates as of 2018-05-20
Advertiser Comments
Tiered Money Market - tier $25,000 - $49,999 - apply online

Type: MMA

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Nationwide Bank
Minimum to earn APY $50,000
1.55% APY
Rates as of 2018-05-20
Advertiser Comments
Tiered Money Market - tier $50,000 - $99,999.99 - apply online

Type: MMA

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Nationwide Bank
Minimum to earn APY $100,000
1.55% APY
Rates as of 2018-05-20
Advertiser Comments
Tiered Money Market - tier $100,000 - apply online

Type: MMA

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Beal Bank, USA
Minimum to earn APY $25,000
1.55% APY
Rates as of 2018-05-23
Advertiser Comments
Money Market - $25,000 and more - Rate collected within 94104 (CA)

Type: MMA

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Radius Bank
Minimum to earn APY $2,500
1.50% APY
Rates as of 2018-05-20
Advertiser Comments
Radius High-Yield Savings - APY for balances $2,500 and above - apply online

Type: Savings

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EverBank
Minimum to earn APY $0
1.50% APY
Rates as of 2018-05-23
Advertiser Comments
Yield Pledge Money Market - APY for all balances

Type: MMA

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EverBank
Minimum to earn APY $0
1.50% APY
Rates as of 2018-05-23
Advertiser Comments
Yield Pledge Money Market - This is a 1 Year Introductory APY for balances between See more$0 - $250,000 - Must be first time money market customers with new money deposit

Type: MMA

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Cadence Bank, N.A.
Minimum to earn APY $0
1.50% APY
Rates as of 2018-05-23
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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MyBankingDirect
Minimum to earn APY $25,000
1.50% APY
Rates as of 2018-05-20
Advertiser Comments
Online Money Market - Tier $25,000 and above - No monthly account maintenance fees

Type: MMA

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Discover Bank
Minimum to earn APY $0
1.45% APY
Rates as of 2018-05-25
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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SmartyPig
Minimum to earn APY $0
1.40% APY
Rates as of 2018-05-20
Advertiser Comments
SmartyPig Savings - Tier $0.01 - $2,500

Type: Savings

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SmartyPig
Minimum to earn APY $10,000
1.40% APY
Rates as of 2018-05-20
Advertiser Comments
SmartyPig Savings - Tier $10,000.01 - $50,000

Type: Savings

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SmartyPig
Minimum to earn APY $2,500
1.40% APY
Rates as of 2018-05-20
Advertiser Comments
SmartyPig Savings - Tier $2500.01 - $10,000

Type: Savings

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MyBankingDirect
Minimum to earn APY $5,000
1.35% APY
Rates as of 2018-05-20
Advertiser Comments
Online Money Market - Tier $5,000-$24,999.99 - No monthly account maintenance fees

Type: MMA

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Bank of Internet
Minimum to earn APY $0
1.30% APY
Rates as of 2018-05-23
Advertiser Comments
Smart Savings - No monthly maintenance fees - No minimum monthly balance requirements

Type: Savings

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UFB Direct
Minimum to earn APY $25,000
1.30% APY
Rates as of 2018-05-20
Advertiser Comments
UFB Premium Savings offers a rate of 1.30% APY with interest compounded daily - APY See morefor balances $25,000 and above - Must be new funds to receive stated rate

Type: Savings

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Nationwide Bank
Minimum to earn APY $0
1.30% APY
Rates as of 2018-05-20
Advertiser Comments
Regular Savings - APY for all balances - Online savings account

Type: Savings

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First Internet Bank
Minimum to earn APY $0
1.26% APY
Rates as of 2018-05-23
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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Amboy Direct
Minimum to earn APY $3,000
1.26% APY
Rates as of 2018-05-23
Advertiser Comments
e-Savings - Tier $3,000 - $100,000

Type: Savings

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Ultima Bank
Minimum to earn APY $1,000
1.26% APY
Rates as of 2018-05-20
Advertiser Comments
UBM Direct Savings Account

Type: Savings

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TIAA Direct
Minimum to earn APY $50,000
1.25% APY
Rates as of 2018-04-29
Advertiser Comments
Money Market -Tier $50,000 -$99,999.99

Type: MMA

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Apple Bank for Savings
Minimum to earn APY $2,500
1.25% APY
Rates as of 2018-05-23
Advertiser Comments
Apple Bank Money Market - APY for balances $2,500 and above

Type: MMA

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Customers Bank
Minimum to earn APY $250,001
1.25% APY
Rates as of 2018-05-23
Advertiser Comments
Money Market - Tier $250,001 and above - Apply online - Limited to PA, NJ See moreand NY market area

Type: MMA

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Nationwide Bank
Minimum to earn APY $0
1.15% APY
Rates as of 2018-05-20
Advertiser Comments
Tiered Money Market - APY for balances between $0-$999.99

Type: MMA

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Nationwide Bank
Minimum to earn APY $1,000
1.15% APY
Rates as of 2018-05-20
Advertiser Comments
Tiered Money Market - tier $1,000 - $9,999.99 - apply online

Type: MMA

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TIAA Direct
Minimum to earn APY $25,000
1.15% APY
Rates as of 2018-04-29
Advertiser Comments
Money Market - Tier $25,000 - $49,999.99

Type: MMA

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