Money Market vs. CD: What’s Better?

CDs have higher rates but offer less access to your money than MMAs.
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Money market account vs. CD: The difference

Money market accounts (MMAs) and certificates of deposit (CDs) are types of federally insured savings accounts that earn interest. But their rates and ease of access differ.

  • CDs tend to have higher rates than money market accounts and give no access to your money until a term ends. Funds get locked up for a set period of months or years, and withdrawing early typically results in a penalty, such as several months to a year’s worth of interest. Most often, CD rates are fixed. (Learn more about CD basics.)

  • Money market accounts usually offer access to funds and rates comparable to regular savings accounts. Both allow you to withdraw money without penalty, and rates are subject to change over time. MMAs generally have larger minimum balances and sometimes offer checks. MMAs can also be called money market savings or money market deposit accounts, and they differ from money market funds, which are a type of investment.

» Learn more: How MMAs work

When to choose a money market account over a CD

  • You want the option to add and withdraw money regularly. You can save money over time with an MMA. And MMAs have the same withdrawal restrictions as regular savings accounts: six per month, not counting in-person or ATM withdrawals. These restrictions vary by bank; some may not impose any limits, and some may charge a penalty for going beyond six.

  • You’re looking for checking account-like perks. Some MMAs offer debit cards, ATM access and check-writing abilities — features often reserved for checking accounts.

  • You prefer the balance of a solid rate plus easy access. Some MMAs stand out for a strong interest rate, though it's a good idea to compare with high-yield savings accounts.

» COMPARE: See the best money market accounts

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When to choose a CD over a money market account

  • You want to lock in a rate. CDs tend to have the highest yields among bank accounts.

  • You want to minimize your risk. CDs are safe investments and carry none of the fluctuating value that stocks have.

  • You prefer to set aside a fixed amount of savings for a big purchase months or years away. A CD requires you to forgo any withdrawals or deposits until its term expires. This can be handy if you want a safe place to keep money designated for a big-ticket item such as a car or down payment.

» Learn more: See the best CD rates

When to choose a savings account instead

  • You want a wider pool of high-yield options than MMAs tend to offer. High-yield savings accounts, particularly those offered by online banks, generally have above-average interest rates. They can be a better deal than many MMAs and still keep your money within your reach. Check out the best online savings accounts.

  • You don’t want to worry about the higher minimum balance requirements that MMAs and CDs can have. Savings accounts tend to have the lowest opening and ongoing balance requirements among the three banking products. Many high-yield savings options don't have monthly fees, but some may still require a certain balance to earn a top rate.

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Frequently asked questions

CD rates are typically higher than money market account rates. (See the national average rates across deposit accounts.) Banks have an incentive to give you better rates for CDs because you promise to give up access to your money until the end of the CD term.

CDs are time-sensitive savings accounts, while mutual funds are investment vehicles in which money gets invested in stocks, bonds or other assets. Learn more about mutual funds.

Both CDs and MMAs are federally insured savings accounts, so they’re equally safe. Up to at least $250,000 gets insured in your name across your individually owned accounts at one bank or credit union. (Learn more about federal deposit insurance.)

Compare types of bank accounts

Your cash can go into many different bank accounts, and it’s helpful to know the pros and cons of account types. Check out these articles to help you choose the right account.

For comparing two accounts:

For deciding on where to bank:

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