Comparing Money Markets and Certificates of Deposit

Comparing Money Markets and Certificates of Deposit

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Which is better - CDs or money market accounts? It really depends on what your investing needs are.

There is often a disagreement between people who invest their money as to which is better: a certificate of deposit or a money market account. If you have come across this argument at some point or wondered yourself which one is better, here are some benefits of each to help you make your decision.

Benefits of a CD
One of the main benefits of investing in a CD is that you can calculate how much your money is going to earn for you when you make your initial investment. If you have a CD with a rate of 2 percent, you know your investment of $100,000 is going to earn you about $2,000 each year.

A certificate of deposit is also beneficial for investors who will not need their money until the CD actually matures. Many senior citizens put their savings in a CD because it will grow and they will not touch the money because they have other sources of income that they use for paying their bills and everyday expenses.

Benefits of a Money Market Account
Money markets are similar to certificates of deposit. However, the main benefit that you get with a money market account is that you can write checks on your balance. With a money market account, money managers typically use your money to invest in other products, such as bonds, CDs, t-bills and so forth. The owner of the account then gets the pay out from those investments.

Most banks and financial institutions offer money market accounts to customers. Making a deposit into your money market account is as easy as depositing it into your checking or savings account. One main problem that goes along with a money market account, however, is that many people do not have the discipline to just leave the money there. Since you get a checkbook with your account, it is easy and tempting to use the money in the account on a whim. As a result, it is difficult to build up funds and have your money work for you.

Both of these financial investing products have benefits that you can enjoy. However, it is up to you to decide which one is best for you, your situation and your spending discipline.

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Today's Highest Online CD Rates

Bank Product Term Interest Rate (APY)
Navy Federal Credit Union 1-Year 0.85% APY with $100,000 minimum
Primary Bank 1-Year 0.80% APY with $1,000 minimum
Gateway First Bank 1-Year 0.75% APY with $25,000 minimum
Primary Bank 3-Year 1.00% APY with $1,000 minimum
USAA Federal Savings Bank 3-Year 0.91% APY with $175,000 minimum
Comenity Direct 3-Year 0.85% APY with $1,500 minimum
Primary Bank 5-Year 1.30% APY with $1,000 minimum
Navy Federal Credit Union 5-Year 1.25% APY with $100,000 minimum
USAA Federal Savings Bank 5-Year 1.11% APY with $175,000 minimum

See More Online CD Rates →

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