Certificate of Deposits and Money Market accounts are both steady methods to help you grow your money. Discover which method of saving is right for you.
Updated
10 min. read
Growing your money isn’t just about how much you earn – it’s also about how much you save. If you put away part of every paycheck, you can build your savings and reach your goals sooner (whether it’s to buy a home or retire early). So, what are your options for making the most of your money? If you're looking for a secure, steady way to save, consider a Money Market Account or a Certificate of Deposit (CD). Both are FDIC-insured and may offer attractive interest rates, making them helpful additions to your financial toolbox. Now, the question: Which one’s right for you? Read on to understand the key differences between money market accounts and CDs, so you can take your next financial step with confidence. A money market account is a close cousin to a traditional savings account, but typically offers a higher interest rate and requires a higher balance. If you’ve started to build savings already, this may be a good option for you. A money market account may: If you put your hard-earned cash in a money market account, you could potentially earn a higher interest rate, while enjoying some flexibility. Typically, you can access your money at an ATM and, in some cases, even write checks from your account. It all depends on who you open a money market account with, so if you go this route, be sure to understand the interest rates, any fees and transaction limitations.What's a Money Market Account?
Great if: You want to earn more money than you would in a typical savings account, and if you’d like to take out money if you absolutely need it. footnote 11
“If your savings allow it, you may want to consider using both a money market account and CDs.”
With a Certificate of Deposit (CD), you agree to put your money away for a set period of time. In return, you can generally earn a higher interest rate than you would in a money market account. A CD may: If you take out your money before the maturity date, you may be hit with a penalty or fee (so best not to do that!). If you choose a CD, you should be comfortable keeping your money where it is. Opting for a CD can make saving a bit easier, as your cash isn’t as accessible as a money market account (this way, you won’t dip in to buy something on a whim). Ready to take your savings to the next level? Consider a CD laddering strategy. You’ll benefit from the higher interest rates of longer-term CDs, while being able to access your money if you need it when the shorter-term CDs mature. Great if: You want to earn more money than you would in a typical money market account. Also, if you’re okay with keeping that money put away. When it comes to putting your money in a money market account or CD, there are several things you should consider: If you’re looking for day-to-day flexibility and easy access to your funds1, a money market account may be a better fit. However, if you can afford to hold your cash for longer periods of time, a CD may produce a higher return. At BMO, your money is FDIC insured with both a money market account and a certificate of deposit, offering more security and less risk than other investment alternatives provided by non-banks – so you can rest easy. Tip: You can often find special CD and money market rates, so take a look and see what’s coming up this season. Here’s a look at our latest CD rates and money market rates. If your savings allow it, you may want to consider using both a money market account and CDs. That way, you’ll have ready access to funds with your money market account while potentially earning higher interest in your CDs. That’ll give you the best of both worlds.What’s a Certificate of Deposit?
Money Market Accounts vs CDs
When to use a Money Market Account
When to use a Certificate of Deposit
The bottom line
