There are a variety of ways to save your money. Two such ways would be opening a money market account or a certificate of deposit (CD).
A money market account is like a mix of a savings account and a checking account. A CD on the other hand, doesn’t offer much flexibility in accessing your money with set term and withdrawal limits.
Keep reading below about Money Market vs. CD Account: Differences, Pros & Cons.
Pros of CD and Money Market
Money Market Accounts are fantastic money management tool:
- Hybrid of a savings account and a checking account
- Money market accounts earn interest much like savings accounts do
- MMAs typically have more favorable rates than a typical savings account
- Include ATM cards and check-writing abilities
CD’s are timed deposit accounts:
- When you open a CD, you choose your term length from the options
- Terms range from three months to five years
- When your CD reaches maturity you will receive your initial deposit back, plus all the interest it earned over the term
Cons of CD and Money Market
However, money market accounts have a few pitfalls as well:
- Don’t have the complete flexibility of checking accounts
- Limit you to six outgoing transactions, like withdrawals and transfers, per statement cycle just like with a savings account
- Higher minimum deposits and balances can come as a cost of better interest rates
Just like money market accounts CDs have their own issues as well:
- You cannot make any withdrawals or additional deposits
- If you make a withdrawal during your term you will pay a penalty
- Can require high minimum deposits
Differences Between Money Market and CD
Comparing the two accounts isn’t that simple since both accounts are structured differently.
There are a few major differences starting with flexibility. Money market accounts are better than CDs if you’re looking for a more accessible account. You can easily deposit and withdraw funds to and from a money market account with an ATM card, personal checks, online or on mobile.
While CD’s limit your access to the money you put in, this can also be seen as bonus and not just a negative if you tend to have issues spending rather than saving.
When it comes to interest rates, money market accounts are generally the preferred account. MMA rates are typically higher than basic savings accounts and short-term CD rates. CDs can have higher rates than a money market account, but those are often the long-term accounts.
Recommended Money Market Accounts
 -Get started and open a Discover® Money Market Account in 3 easy steps. • Available nationwide online • Earn high yields with flexible access to your cash. • Earn 3.55% APY balances $100,000 and over • Earn 3.50% APY balances under $100,000 • Save time and deposit checks securely through the Discover mobile app • Easy cash access via debit or check, or via ATM at over 60,000 no-fee ATMs • Move money in and out of your money market account easily and securely with just a few clicks or taps |
Recommended CD Accounts
• Get started and open a Discover® CD in 3 easy steps. • Available nationwide online • Discover offers CDs with some of the highest and most competitive rates! • Select terms as short as 3 months up to 120 months • Rates ranging from 2.00% APY up to 4.00% APY. • Opening a Discover Bank Certificate of Deposit is extremely quick and easy. • Funds on deposit are FDIC-insured up to the maximum allowed by law. |
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Conclusion
Both money market accounts and CDs offer useful but different ways to save and access your money. Depending on what you are looking for either account could benefit you so it is hard to say which is definitively more beneficial!
Additionally, If you are interested be sure to check out our list of bank bonuses, saving rates and CD rates!
