Advertiser Disclosure

DollarGeek strives to provide you the utmost clarity on your personal finances. We look to provide you with as many resources as possible to make the best financial decisions, but our website does not present every financial company or product available on the market. Many of the offers that appear on the website are companies from which DollarGeek receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear) but it in no way affects our recommendations or advice, which are formulated through countless of hours of research. Please view our advertising policy page for more information.

Our team works hard to keep our rates and products up to date, but we do not guarantee any rates or terms on the website. The rates and terms you see on DollarGeek may be different than what you see on the providers website at any given time. Rates can also differ from your final rate and terms, which is based on a variety of factors such as your credit score and what the lender or financial services provider seeks fit.

Editorial Note: Opinions expressed here on DollarGeek’s website are ours alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Money Market Accounts Vs CDs; When Should You Choose Which?

Brandi Marcene
Brandi Marcene
With a wealth of experience and a passion for all things personal finance, Brandi's the go-to expert for top-notch content. Whether you're looking to learn more about budgeting, investing or any other financial topic, Brandi's got you covered.

DollarGeek's goal is to help you make the best financial decisions. To help us do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations or ratings.

Table of Contents

Money market accounts and certificates of deposit (CDs) are popular and federally insured savings options available at banks and credit unions. Both accounts typically offer higher interest rates than traditional savings accounts, making them useful for growing your funds.

Takeaway Points

  • Money market accounts offer easy access to funds, while CDs do not. CDs lock up your funds for a fixed term, and early withdrawal may result in penalties.
  • CD rates are usually fixed, while money market account rates are subject to change over time
  • Money market accounts have larger minimum balance requirements compared to regular savings accounts
  • MMAs and CDs are both types of federally insured savings accounts that earn interest

Money Market Accounts Vs CDs; What Are The Differences?

There are a few key differences between the two.

Features Of Money Market Accounts:

  • Similar to a savings account: You can withdraw money up to 6 times per month, usually with the convenience of a debit card.
  • Required minimum balance: Your MMA account may require a minimum balance to keep it open.
  • Interest rate: Higher interest rates will help your funds grow faster.

Features Of CDs:

  • Set duration: A CD has a set duration — typically several months or even years.
  • Potential penalties for any early withdrawals: You can withdraw your funds if you require access to them. However, you may need to forfeit the interest earned or pay the penalty to do so.
  • Higher interest rates: CDs usually have higher interest rates, and the rates are fixed for the term of the CD

When To Choose An MMA Over A CD

The following criteria should steer you more towards an MMA:

  • If you need regular access to your funds.
  • If you have a low balance and need to make occasional payments.
  • If you don’t have a specific savings goal in mind and are looking for more flexibility with your funds.

When To Choose A CD Over An MMA

A CD might be a better choice:

  • If your top priority is to earn the highest interest rate.
  • If you have a specific savings goal in mind, such as saving for a down payment on a house or for retirement.

It’s worth noting that both CDs and MMAs are FDIC-insured up to $250,000, providing an extra layer of security to your savings.

Matthew Levy, Personal Finance Expert

Ultimately, the choice between the two depends on your financial goals and circumstances, and it is important to consider factors such as how much you have to save, how often you’ll need access to your funds, and your risk tolerance.

When To Choose A Savings Account Instead Of An MMA Or A CD

Opting for a savings account over an MMA can be a good choice in some situations. For example, if you’re searching for a broader selection of high-yield options, high-yield savings accounts offered by online banks may be a better deal, as they usually offer above-average interest rates while keeping your money readily available.

Moreover, if you prefer not to worry about meeting higher minimum balance requirements that can come with MMAs and CDs, savings accounts can be a great alternative. Typically, they have the lowest initial and ongoing balance requirements when compared to the other two options.

Many high-yield savings accounts don’t require monthly fees, but some may still demand a certain balance to qualify for the highest rate. Therefore, a savings account might be a more suitable option for you if you’re not interested in maintaining high minimum balances.

Do you want to earn even more while saving? Check out our guide on how to earn higher interest.

Frequently Asked Questions (FAQs)

Could I Lose Money In An MMA?

It is possible to lose money in a money market account, but it is highly unlikely. Money market accounts are considered low-risk investments, as they are FDIC-insured up to $250,000 per depositor. This means that your funds will be protected even if the bank or financial institution fails.

Additionally, money market accounts typically invest in low-risk, short-term investments such as Treasury bills and commercial paper, which helps to minimize the risk of loss.

However, it is important to note that the interest rate on money market accounts can fluctuate, and if interest rates decrease, the value of your account may decrease as well.

Could I Lose Money In A CD?

While it is possible to lose money in a CD, it is highly unlikely if you hold the CD until maturity. CDs are considered to be low-risk investments, especially if they are FDIC-insured or NCUA-insured, meaning that your investment is protected up to the maximum insurance limit of $250,000.

However, if you withdraw your funds early, you may incur early withdrawal penalties that can eat into your earnings or even your principal investment. Additionally, the interest rate on a CD may not keep up with inflation, which means that the value of your investment could decrease over time.

Overall, if you hold a CD until maturity and choose a reputable financial institution that is FDIC-insured or NCUA-insured, your risk of losing money is minimal.

Where Can I Get An MMA Or CD?

These account types are commonly offered by banks and credit unions. Check with your current financial institution to see if they offer these accounts. You may also want to compare rates from different banks, including online banks, which often have higher rates than traditional brick-and-mortar banks.

Find the Best Credit Card by Category

Search for a credit card by name

See how much you'll earn in interest with a high-yield saving account

How much will you deposit into your savings account?


What is the APY on the savings account?


You can expect to earn this much in interest: