Should I Use a Money Market Account or a CD?

by Rebecca Lake |March 1, 2019

So, you've decided to get serious about savings this year. (Bravo!)

But do you know where it makes the most sense to put your money?

Interest rates have been climbing lately, and money market accounts and Certificate of Deposit (CD) accounts are giving traditional savings accounts, well, a run for their money.

But first, the basics: CD accounts are time deposits that have a fixed interest rate, fixed term and fixed maturity date when money can be withdrawn. A money market account is an interest-bearing account that typically earns a better rate than traditional savings accounts. Money market accounts follow Regulation D rules for monthly withdrawals (up to six per month are allowed) and may come with checks or a debit card.

Understanding the ins and outs of each account type and how it relates to where you are in life — whether starting your first job or heading into retirement — will help you maximize what you sock away.

Young adult man wearing glasses looks out the window at some trees

4 fees to account for

High-yield money market and CD accounts can dazzle savers with great rates, but it's important to check the fees. Those may include:

  • Monthly maintenance fees
  • Minimum balance fees (for money market accounts)
  • CD early withdrawal penalties
  • Excess withdrawal fees (which can apply to money market accounts if you make more than six qualified withdrawals per month)

The more fees a money market or CD account charges, the less of your interest earnings you get to keep. The good news, says Best, is that "in today's competitive banking environment, you can easily find CDs and money market accounts that charge no or very low fees."

Rebecca Lake

is an avid financial goal-setter and saver. She's currently saving to buy a small urban homestead using a combination of high-yield CDs and a money market account.

The content reflects the view of the author of the article and does not necessarily reflect the views of Citi or its employees, and we do not guarantee the accuracy or completeness of the information presented in the article.