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Money Market vs. CD

Both money market accounts and CDs earn interest. You'll likely earn more with a CD, but you have to lock your money away for a set time period.
Banking, Banking Basics, CDs, Savings Accounts
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money market vs. CD

Money market account vs. CD: How to choose

A money market account and a certificate of deposit are savings accounts that are federally insured and earn interest. They sometimes have higher minimum balance requirements than basic or high-yield savings accounts. CDs generally offer the best rates, but it’s best to choose a CD only if you’re willing to set aside your savings for a period of time without making withdrawals. Financial institutions charge a penalty for early withdrawals.

When to open a money market account

  • You want to earn some interest
  • You want the ability to withdraw money on short notice, similar to the flexibility provided by a savings account. (See section below for more information on savings accounts.)
  • You’ve found a money market account that earns more than a comparable savings account

» To learn more about how money market accounts work, read our primer on MMAs

» To learn more about how CDs work, read our primer on CDs

When to opt for a CD

  • You won’t need to withdraw your money for a predetermined time period, usually a few months or a few years
  • You want to earn the maximum amount of interest without the risk associated with investing in stock or bond markets
  • You can meet the minimum balance requirement; a number of banks require at least $500 or $1,000 to open a CD

» Want to find the best CD rates? Here’s what banks are offering this month

When to consider a savings account instead

High-yield savings accounts, particularly those offered by online banks, generally have above-average interest rates and low minimum balance requirements. It makes sense to go with a savings account if you find one that offers better rates than a money market account and don’t want to tie up your cash in a CD.

Compare accounts

 CDsSavings accountsMoney market accounts
EarningsGuaranteed return; interest rates are usually higher than at savings and money market accountsGuaranteed return; rates varyGuaranteed return; rates vary
Minimum deposit (varies by financial institution)$1 - $1,000$0 - $100$1 - $10,000
Access to your cash
  • Restricted during the term of the CD
  • Term lengths usually range from three months to five years

  • Generally unrestricted, except for a maximum of six monthly convenience withdrawals, i.e. electronic transfers
  • Does not offer debit card or check-writing feature

  • Generally unrestricted, but a maximum of six monthly convenience withdrawals, which include checks, debit card swipes and electronic transfers
  • Some accounts offer debit card and check-writing feature

Compare rates Best CD rates Best savings ratesBest money market rates

Once you’ve decided whether to put your money in a CD, savings account or money market account, you’ll want to look for financial institutions that offer the best rates. Some banks and credit unions will let you open an account online, while others may require you to visit a branch or call, depending on the type of account.

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