Money Market vs CD vs Savings Accounts

Three of the most popular type of savings accounts are Money Market Accounts (MMA), Certificates of Deposit (CDs) and Regular Fixed Rate Savings Accounts. All three of them are worthy savings vehicles. However, they all have distinct and different qualities that need to be compared and contrasted so you can select the one that’s best for your savings goals.

Traditional Fixed Rate Savings Accounts: These are the most common savings accounts. They feature flexibility in the fact that you can deposit and withdraw funds at any time. You can open these accounts with as little as one dollar. The average balance that can be left in the account without incurring fees is usually minimal. Also, sometimes these accounts feature few or no fees.

Money Market Accounts: Money market accounts offer higher yields than most traditional savings accounts. You can write checks on the money. Many of the banks that offer these will issue an ATM upon request.

However, you are usually restricted on the number of monthly checks you can write and withdrawals you can make without incurring a penalty.

You may need more money to open a money market account and you have to maintain a higher minimum balance.

Certificates of Deposit (CDs): These usually have the highest yields of all of these three accounts. However, you cannot access the money during the term of the CD. This can range anywhere from six to thirty-six months. The longer term you select the higher the interest you will earn on your deposits.

Searching for the Best Savings Account

Selecting the right savings account will help put your money to work for you. Make sure you understand your savings goals prior to seeking a savings vehicle:

• Are you looking to be able to have constant access to the money?
• Do you want to see your money make money quickly?
• Are you seeking the highest yield?

Once you determine the goals, then it’s time to research the institution and find the deal that best matches your savings goals.

In fact, savings account features can vary greatly. You might want to create a chart comparing the following factors:

• Fees
• Minimum to open
• Withdrawal frequency
• Annual interest rate
• Minimum balance

And make sure you check out any special deals the financial institution may be offering to entice new customers.

Doing good research will make you fully informed about your CD, Savings Account and Money Market options.