Which is right for me – a money market or a CD?
So you've got some cash you want to stow away. Should you open a money market account or certificate of deposit?
Which one is right for you?
When you open a CD, your interest rate will stay the same, but you have to keep your money in the account for a set period – terms range from 3 months to 5 years – or else you pay an early withdrawal penalty. Typically, the longer term you select, the higher the interest you receive.
A money market account gives you greater access to your money, but the tradeoff is that the interest rate may fluctuate – up or down, on a daily basis. So it’s hard to predict which product will result in a larger bank balance over time.
Your savings habits can play into your decision, too. For some people, a CD helps them meet their savings goals because their money is locked in for a specific amount of time – making it harder to spend unnecessarily. Others might want the access to their funds that a money market account provides. Or, some people may choose to put their money in both a CD and money market account to take advantage of the benefits each has to offer.
Take a look at the product features to learn more and help you decide what is right for you:
Money market account features
Money market accounts are similar to regular savings accounts. You can:
- Use your ATM card and checkbook to access your funds
- Withdraw or transfer money six times per month1
- Make deposits to your account whenever you want
- Monitor your account online 24/7
- Feel secure because your money market account is FDIC insured up to at least $250,0002
Certificate of Deposit features
With a CD, you’ll get:
- Attractive interest rates
- No monthly maintenance fees
- Terms from three months to five years
- Free online banking
- FDIC insurance up to at least $250,0002
Both CDs and money market accounts are good tools for putting your money to work. You just need to determine what is right for your situation:
- The locked-in rate of a CD
- The flexibility of a money market account
- A combination that allows you to enjoy both the stability of a CD as well as the access to cash provided by a money market account
To learn more about these accounts, check out our comparison chart.
1 Up to 6 pre-authorized withdrawals per monthly statement cycle allowed including telephone or electronic transfers, check or point-of-sale transactions. This limit does not apply to the number of withdrawals you can make at an ATM, by mail or at a Nationwide branch.
2 FDIC insurance temporarily increased from $100,000 to $250,000 per depositor until December 31, 2013.
