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At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our banking reporters and editors focus on the points consumers care about most — the best banks, latest rates, different types of accounts, money-saving tips and more — so you can feel confident as you’re managing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. When building your savings, it is important to choose an account that offers a competitive interest rate to best grow your savings, but also one that will allow you to access your money should you need to. and each provide a boost to your savings by offering competitive rates, but differ in how liquid — the ability to be converted into cash easily at any time — they are. Both accounts are readily available and can be found at traditional banks, online-only banks and credit unions, providing consumers with lots of options. How money market accounts work
A is a safe place to stash your money at federally insured financial institutions. These accounts can pay you competitive interest rates that can boost your overall savings. Money market accounts typically pay variable interest rates, which means the rate can rise and fall depending on market conditions. In general, these funds are accessible and make it relatively easy for you to retrieve your savings a few times each month, though there may be limits to how many times you can move money out. Typically, the cap limits withdrawals to six a month, though some banks allow more, following a move by the Federal Reserve to in response to the coronavirus pandemic. Contact your bank to confirm its withdrawal and transfer policies. Money market accounts typically come with a debit card and/or checkbook, making it easier to access your funds should the need arise. How CDs work
A , or CD, is another type of federally insured savings account easily found at banks and credit unions (where they are often called share certificates). CDs pay a fixed interest rate. Longer-term CDs, such as , tend to pay higher rates than shorter-term CDs, like and . Unlike money market accounts, however, CDs don’t offer the flexibility of easy access. In exchange for agreeing to lock your money up for an agreed period, banks and credit unions agree to pay a set yield for the length of the CD term, typically three months to five years. No matter what term you choose, you can use Bankrate’s to see just how much interest you’ll earn. When money market accounts are a better fit
A money market account is a good way to grow your savings, but it’s not the best fit for everyone. Here are two situations when a money market account makes sense: You want easy access to your funds
A money market account allows you to spend or transfer funds a few times each month or statement period. Though monthly typically apply, most consumers will find it’s possible to work within those guidelines to cover any emergency expenses. A money market account is a better choice than a CD if you’re looking for someplace to stash an and may need immediate access to it. CDs are subject to an early withdrawal penalty, should you decide to take funds out of a CD before its term ends. You re looking for a short-term boost to savings
Money market accounts often offer competitive interest rates and provide a better return than a traditional , for example. A higher APY can go a long way toward helping you achieve a short-term savings goal, such as a vacation, wedding or new computer. With a money market account, you’re able to grow your savings more quickly without risking any principal while still maintaining easy access to your funds. When CDs are a better fit
CDs are a good choice for those looking to impose Here are two cases when a CD might be a good option: You have a long-term plan for these funds
CDs, with their set terms, are an easy way to impose some financial discipline, since withdrawing money before the end of a term comes with a penalty. When you open a CD, you are choosing to lock your funds away for a specified period. Depending on the term, it might range from a few months to several years. If you have a specific plan for these funds — and won’t need to tap them in an emergency — then a CD might be a good fit. If you plan to buy a house in five years, for example, then a CD could be the right place to stash a down payment, allowing you to take advantage of the most competitive interest rates while still providing access to the funds when you are ready to purchase your home. Plus, there’s no worry about losing money, unlike investing in stocks or other types of nonguaranteed investments. You want these savings locked away
Saving money can be difficult. If you struggle to keep from spending your savings account, then a CD could be a good choice. The funds will be off limits for the entire term, unless you’re willing to pay an early withdrawal penalty — incentive to keep from dipping into your savings to explore a last-minute sale at your favorite store. Plus, your savings will be growing through the term. Where can you get a money market account or CD
CDs and money market accounts are both popular account types, offered by many banks and credit unions. Check with your current financial institution; keeping all your accounts in one place can make managing your financial life easier. If you’re looking for the highest possible rate, shop around and compare offers. , such as or , tend to offer better rates than their brick-and-mortar competition. When to stick with a savings account
The benefit of a money market account is that it balances competitive rates on your savings with the flexibility of a checking account, but it often has higher minimum balance requirements than regular savings accounts. Like savings accounts, money market rates are subject to market changes. A is usually just as good as a money market account: It lets you save money and earn a competitive rate. In an emergency, money in a savings account can be withdrawn or transferred to a checking account where the funds can be accessed by check or debit card — just like a money market account. Savings accounts, however, don’t come with a checkbook. A savings account is a better alternative to a CD if you think you may need access to your funds before the term ends. The early withdrawal penalty that comes with most CDs can be stiff and result in a loss of any interest earned and possibly principal, should the money be pulled out before the end of the term. Bottom line
Whether you choose to open a or a , it’s important to consider both rates and accessibility. It is a good idea to put your money to work in one of these low-risk options if you can’t risk losing any money. But make sure to determine your goals before making either choice. Learn more
SHARE: René Bennett is a writer for Bankrate, reporting on banking products and personal finance. David Schepp is a wealth editor for Bankrate, focusing on deposits and consumer banking content. Related Articles