Money market funds aren’t FDIC-insured like money market accounts and CDs, but they invest in short-term debt securities that are generally safe. While CDs offer fixed interest rates, which can be especially attractive when rates are expected to drop, money market accounts come with increased liquidity. “The past few years have been a relief for those looking to earn interest on their cash, like investments such as CDs and money market accounts.”
- The accounts typically have variable interest rates, so if the wider rate landscape rises or falls, so will the rate on your money market account.
- It’s best to shop around and compare rates and terms before making a decision.
- Margarette Burnette is a NerdWallet authority on savings, who has been writing about bank accounts since before the Great Recession.
- Brokered CDs are like bank CDs, but instead of being purchased directly through the issuing bank, you buy them through brokerage firms like Vanguard Brokerage.
- If you already have an account with a brokerage firm, you may choose to put your cash in a money market fund until you use it to, say, pay a bill or buy a stock or other mutual fund.
You can use a money market fund to save for short-term goals such as a wedding, a down payment on a home, or an unexpected life event. A money market fund is a type of fixed income mutual fund that invests only in highly liquid, short-term debt. Money Market funds offer lower market risk and give your savings an opportunity to grow. Note invest in cds or money market that this is different from funds held in money market mutual funds, which are not federally insured.
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Top Value Stocks to Buy and Hold for 2026
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That said, you can still earn more than you would in a traditional savings account by relying on products like money market accounts and certificates of deposit (CDs). CDs and money market accounts are both types of savings accounts that help you stow away extra funds and grow your savings with interest. Like high-yield savings accounts, rates on money market accounts are variable, fluctuating with market conditions. Maximize your savings with a money market account—enjoy higher interest rates and easy access to your funds. Yes, all the money market accounts on our list come from a bank or credit union that is federally insured. You can find both money market accounts and CDs at banks and credit unions.
She can choose from a money market account that earns a variable 3% interest rate or a 36-month CD that earns a fixed 3.5% interest rate. Money market accounts and certificates of deposit both provide safe ways to grow your savings by earning interest over time. Money market accounts are ideal for depositing money when you want to earn a better interest rate—but also have easy access. Some money market accounts impose restrictions on the number of transfers or withdrawals you can make each month, imposing a fee for exceeding the account limits. You can open a money market account through most banks or credit unions, and many charge no monthly maintenance fees. CDs make it harder to access your money than a money market account, although you might earn a better rate.
- Want to earn 10 times the national average APY?
- Here’s what to consider when it comes to deciding between these two popular cash options.
- If you want your money to earn the highest rate available, a long-term CD (perhaps even three years or longer) may make the most sense.
- CDs are issued by banks and are insured by the FDIC up to $250,000 per depositor, per insured bank, for each account ownership category.
- If offered by brokerage firms, they are known as brokered CDs, which can be bought either as new issues or both bought and sold on the secondary market.4 Some brokered CDs are callable, which means the bank can redeem the CD on a specified date before the maturity date.
» Want to know more about how your money is protected? Seychelle is a seasoned financial professional turned personal finance writer. Most start at a balance minimum of $1,000 but it varies by bank. Back in 1984, a five-year CD had an average interest rate of 11.74% APY and a one-year CD wasn’t far behind at 11.17% APY, according to Bankrate.
Roles of the Stock Market
Regardless of which option you choose for your money, higher performance in your savings will likely result. Nobody has a crystal ball, but looking at future trends in interest rates may signal whether a CD is the right choice. After all, in the event of a sudden cash crunch, the last thing you should face is being unable to access your money without a penalty. It will take time to accrue that level of savings.
Short-term goals
(You’ll want to have a strong emergency fund set aside in case you run into a financial hiccup before the CD term ends.) You’ll probably be hit with an early withdrawal penalty if you pull money out of a CD before the account term ends. There’s no one-size-fits all answer, so consider all the above and shop around for the best rates before you invest in either CDs or T-bills. Check out our list of the best CD rates.
When a CD Is Better Than an MMA
If you think that interest rates will rise for a period of time, you would be better off investing in shorter-term CDs (3 or 6-month CDs). CDs are often used to fund goals within a 10-year time frame, when you may not want to risk the price fluctuation of market-based options, such as a stock mutual fund. Money market accounts (MMAs) and certificates of deposit (CDs) may seem interchangeable. While we strive to provide a wide range of offers, Bankrate does not include information about every financial or credit product or service. It allows you to take advantage of the most competitive interest rates, preserving and growing the funds until you’re ready to purchase your home.
CDs can have higher rates than a money market account, but those are often longer-term accounts lasting two years and longer. When it comes to interest rates, money market accounts may be the way to go. You will want to double-check with your bank, though, since not all money market accounts offer these perks.
Please visit etrade.com/ratesheet for more information. 3.50%Annual Percentage Yield (APY) may change at any time and fees may reduce earnings. APY may change at any time before or after the account is opened.
These indices can provide a picture of the wider stock market or a specific sector, such as technology or healthcare. Similarly, economic events like interest rate changes or geopolitical issues can affect investor confidence and stock prices. Fundamental factors are rooted in a company’s earnings, profitability from its operations, and the goods or services it offers. A significant aspect of the stock market—dictating what’s traded and how—is the regulations and regulators involved.
On the other hand, you may not be limited to a certain number of ATM withdrawals each month, meaning you could freely withdraw funds without worrying about penalties. If you have more than that, you might consider opening a secondary account at another insured bank. If you put that much money into a CD with 5.65% interest, you’ll earn $5,650 after a year. Here’s how your money could grow in each type of account. The idea behind a CD is to fund the account once, then leave it alone to let it grow. You can use an MMA to pay bills, make purchases in person or online, or save for short- or long-term financial goals.
Fidelity Investments and its affiliates, the fund’s sponsor, is not required to reimburse the fund for losses, and you should not expect that the sponsor will provide financial support to the fund at any time, including during periods of market stress. An investment in the fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. “For this reason, make sure you have enough cash in highly liquid form to cover your typical expenses plus some amount in an emergency fund first before you start contemplating the potential for higher rates available on CDs,” says Carter. A traditional certificate of deposit obtained directly from a bank typically pays a fixed interest rate over a specified time period. Your cash can go into many different bank accounts, and it’s helpful to know the pros and cons of account types.
They put money in stocks, ETFs, mutual funds, and other securities, expecting their value to grow over time; these are not the quick trades you see in movies to get in and out fast. 3For the 10-year period ended September 30, 2025, 6 of 6 Vanguard money market funds outperformed their Lipper peer-group average. You can buy a Vanguard money market fund in your account through the Buy & sell feature on your secure account dashboard. Industry regulations, including additional SEC money market reforms in 2016, help ensure money market funds maintain their stable values. Although money market funds seek to maintain a stable $1 share price, capital preservation is not guaranteed.
Best Money Market Accounts for 2026: Up to 4.25%
Indexes are important since they are used as benchmarks for stocks and portfolios. For instance, if a company reports higher profits than expected, its stock price might increase as more investors want to buy shares, hoping for future growth. High stock prices can indicate a company’s success—or at least the feeling of buyers that they are doing well—but they can also result from stock splits, dividends, and share repurchases.
These days, CD rates are far more modest with five-year and one-year CDs averaging a little over one percent with highs of 5.60% for 12 months. This means you could lose money on your investment if you need to withdraw in an emergency. Money markets typically have ATM cards and check-writing privileges at certain banks. While some banks still limit withdrawals to six per month (despite the indefinite suspension of Regulation D), you’ll still have easy access to your money with an MMA.
An investment in the Fund is not a bank account and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 5Bank accounts can offer more liquidity, ATM access, and overdraft protection. Money market funds try to maintain low-risk by keeping their NAV at a stable $1.00 per share. Our low-cost funds are crafted to help you reach your goals and achieve investment success. No matter the goal—you still have the potential to earn interest on your savings while reducing market risk. You also can open a Cash Account offered by Atomic Brokerage which allows you to earn interest on your cash through a cash sweep program.
However, there are subtle differences in interest rate risk. In that case, you may find that splitting your savings between an MMA and a CD is a wise way to take advantage of the best features of both. If your primary goal is to get the most interest on your savings, a CD may be the best option. If you need regular access to your money or want the option in case you need it, a MMA may be a better choice.
