Money Market Accounts vs. CDs: Which is Best for You 

Learn how interest rates and convenience could impact your savings decision. 

Vacation or staycation. Dine out or eat at home. Go to the movies or stream online. Life’s full of decisions when it comes to saving your hard-earned dollars, some easier than others. If you’re working toward a financial goal and are looking for new ways to grow your money, money market account vs. certificate of deposit (CD) may be a decision worth considering. After all, both types of savings vehicles offer many valuable features and benefits.  

Money market account vs. CD really depends on why you’re saving and how you’d like to access your money. No matter your preference, you’ve got choices.  

Consider how interest rates can impact your savings 

Money market: The interest rates on money market accounts can fluctuate depending on market conditions, but this type of account typically earns more interest than, say, a checking account. When considering money market account vs. CD, however, it’s important to remember that the yields from money markets may be considerably smaller than those from CDs.  

CD: If you like the predictability that comes with a fixed interest rate and APY (both the interest rate and APY remain the same throughout your term), consider opening a CD. You’re likely to find a CD with a higher interest rate and APY than money market accounts and other savings vehicles.  
 
Think about the cash access you need 

Money market: Money market accounts work much like your traditional savings account. You deposit money and are able to withdraw cash, and the account has no maturity date. If you need somewhere to park your emergency fund (cash to pay for unexpected expenses like auto or home repairs), a money market account may be the way to go. 
 
CD: Certificates of deposit are sometimes referred to as ‘term accounts’ because a CD matures after a specified period of time (think three months to 10 years), which is when you receive the principal that was deposited along with your accrued interest. If you’re going back and forth on money market account vs. CD and are saving for a large, one-time expense (new set of wheels on your mind?), a CD might be just the savings vehicle for you. 
 

Decisions, decisions 

As you consider money market vs. CD, ask yourself the following questions: 

• What kinds of savings goals am I targeting? 

• How soon will I need to access the money? 

• Are check writing or ATM access important? 

• Is there a minimum balance requirement? 

• What are the fees associated with the account? 

• Are there steps I can take to get a higher interest rate? If yes, are there trade-offs that I need to understand? 
   

Discover Bank – the only bank that offers preferred member APYs on select products to AAA Members, offers a full range of CDs and IRA CDs with terms from 3 months to 10 years, as well as Money Market and Online Savings Accounts. To learn more call 1 800 347 7056, or visit them at AAA.com/Deposits 

The article and information provided herein are for informational purposes only and are not intended as a substitute for professional advice.