Certificates of Deposit vs. Money Market Accounts

Certificates of Deposit vs. Money Market Accounts

A piggy bank may have taught you the value of saving, but now that you're an adult, place your hard-earned cash somewhere more advantageous. Both certificates of deposit (CD) and money market accounts offer important features and benefits that can help you augment and protect your savings. If you're deciding between the two (or considering using both), explore our certificates of deposit vs. money market accounts debate below.

Certificates of Deposit vs. Money Market Accounts

certificate of deposit is a certificate issued by a financial institution to a person depositing money for a specified length of time. It is low in risk and low in return. A money market account, on the other hand, is like an enhanced savings account. Although it offers a slightly higher interest rate, it also requires a slightly higher minimum balance. Don't confuse this savings vehicle with a money market fund, which is typically offered by brokerage houses and mutual fund companies and pays a higher interest rate.

Neither a certificate of deposit nor a money market account is objectively better than the other, so you will need to consider how their benefits and drawbacks suit your savings goals.

Interest Rates

Most CDs have a fixed interest rate, which is great for those who want certainty and security. This rate is often higher than the rates offered by money market accounts and other savings accounts. Money market accounts, on the other hand, have a fluctuating interest rate that varies with the market conditions.


If you will periodically need to access the money in your savings, choose a money market account. These savings vehicles do not have maturity dates, and you can withdraw funds a limited number of times without penalty (the federal limit is six). Note that if you need to access the funds frequently, they may be better suited to a traditional checking account. CDs, on the other hand, must be allowed to "mature" for a specified period of time, after which the depositor can remove both the principal and the accrued interest. If the depositor wishes to withdraw money before this date, a withdrawal penalty will typically apply.

Additional Features

Money market accounts are similar to checking accounts in some ways. For example, they sometimes offer convenient features like check writing and access to ATMs. Because the funds in CDs cannot be accessed until their maturity date, they can't offer these features.


Whether you would like a money market account, a certificate of deposit, or both, explore the options offered by your credit union or bank. Speaking of which, are you interested in joining a credit union? If you live or work in southwest Missouri, check out BluCurrent Credit Union. We offer a variety of investment options, including both certificates of deposit and money market accounts.

To learn more about our services and benefits, please stop by one of our branches or check out our website. We would be happy to help you further explore the certificates of deposit vs. money market accounts debate

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