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CD vs Money Market Account: Which is Better?

Both CDs and money market accounts have unique advantages for savers to explore.

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with Inflation continues and a Possible recession Around the corner, it’s important to have cash stowed away just in case. This may mean increasing your savings efforts or, for many people, exploring new ways to increase the funds you already have.

open a Certificate of Deposit or Money Market Account Both are possible ways to do this. Each vehicle has unique advantages for savers to explore, though perhaps the one that’s best for your personal financial situation. Not sure which is best for your financial endeavors? Below, we’ll break down what to know about each.

Start by exploring your CD options here to see how much interest you can earn

What is CD?

A CD – or Certificate of Deposit Account — is a type of savings product that earns a set interest rate As long as you keep the money untouched until the maturity date of the CD. That’s anywhere from a month to five years down the road. Unlike other types of savings accounts, you can’t deposit more into a CD once you open it. This base is yours interests Only on your initial unit investment.

“They’re considered safer than the stock market or bonds,” said Christine Petersmark, an investment advisory representative at BridgeRiver Advisors. “You have a fixed rate of return.”

For this reason, CD It can be a smart choice if you’re looking for a safe place to park your money or if you’re saving for a specific long-term goal.

As Bradley Thompson, a chartered financial analyst at New Canaan Group, explains, “If you know you need to pay for a wedding in August 2024 that will cost $100,000 and the interest rate is 5% over that period, you can buy a CD. $95,000 today. for this, and use the income to meet expenses when it matures.”

They’re not great if you need regular access to your cash. Most CDs come with a penalty for withdrawing your money early, though some do No-penalty CD You can also explore.

Check CD interest rates here now and start earning more interest!

What is a money market account?

A money market account is a type of interest-earning bank account. Unlike CDs, you can deposit funds — and withdraw them — whenever you want (though there may be a limit of one transaction per month). They often come with debit cards and check-writing capabilities, so you might want one if you need easy access to money and don’t want to incur penalties.

“The difference between a money market account and a CD is that money market accounts offer more liquidity than CDs, because you can usually access your funds without penalty,” says Petermark. “On the other hand, CDs have a fixed term, and you usually can’t access your money until the end of the term without incurring early withdrawal penalties.”

Money market accounts typically pay a higher APY than traditional savings accounts, though generally Not as loud as some CDs. They may have larger minimum balance requirements, meaning they’re not an option for every budget.

Which one is better?

When it comes to deciding which is better, both a CD and a money market account have unique advantages that appeal to savers. If you want to lock in your money at a higher interest rate, a CD may be a better choice. But if you trade well a higher rate may be desirable for greater access than a money market account. That said, CDs and money market accounts aren’t your only options if you’re looking to save and grow your money. you can see High Yield Savings Account, which offers a higher-than-average APY than traditional savings accounts. They are also easier to transfer money in and out than CDs.

If you’re not sure which option is best for your finances, it may be wise to talk to a financial professional. They can point you to the right account for your goals and budget. You can now explore your high-yield savings account options here to see what rates you qualify for.

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