Updated October 30, 2023

CD vs Savings vs Money Market

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CDs, savings, and money market accounts can all help you grow your money over time. But which one is right for you?

Picture this scenario: You're looking to put money away for future savings. While looking for an account, you bump into savings accounts, certificates of deposit (CDs), and money market accounts.

What's the difference? How do you know which one is best for you? It can be a little confusing, so read on for everything you need to know.

What is your primary goal for saving money?

Which One Is Best For You?

  • Savings accounts are great for short-term plans like vacations or emergency funds. This is because funds stored in savings accounts are easily accessible.

  • Money market accounts are similar to savings accounts, but they could come with more features like ATM cards and check-writing abilities (depending on the bank). It's good if you want more versatility.

  • CDs are great for long-term goals. You lock away your money for a fixed term, so it's good if you know you won't need the money any time soon. In exchange, they often offer higher interest rates.

SavingsMoney MarketCD
FDIC/NCUA InsuranceYesYesYes
Debit/ATM CardMaybeMaybeNo
TransactionsUsually 6/moUsually 6/moNone

What is the safest account to save money?
Generally, savings, money market, and CD accounts are all safe as long as they're FDIC or NCUA insured.

What Is a Savings Account?

A savings account is a place to store your money, usually offering interest to help your money grow. It's designed to help you store funds easily while keeping the money super accessible in the case of an emergency.

Interest rate for savings accounts is variable, and could be subject to change at any time. So you could open an account, and the rate could go up and down. Online saving accounts usually offer the highest interest rates.

The drawback to a savings account is that they usually have withdrawal limits (since the point is to save money). Federal Reserve Regulation D limits savings accounts to 6 transfers or withdrawals per statement cycle.[1] Additional withdrawals could incur fees.

How often do you plan to access your savings?

Some savings accounts may require you to make an opening deposit or keep a minimum balance in order to waive a monthly fee. But that'll depend on the bank you choose.

What is a high-yield savings account?
Often referred to as a high-interest account, a high-yield savings account is a type of savings account that offers better-than-average interest rates.

  • Great for beginners
  • High accessibility
  • Low fees and minimums (often free)
  • Limited withdrawals
  • APY can change without warning

What Is a Money Market Account?

Money market accounts (MMAs) can be thought of as savings accounts with some checking features. They may come with a debit card and the ability to pay bills and/or write checks (though not all). This gives you more ways to access your funds.

Money market accounts could have a higher opening deposit (around $1,000 is common). And some may require a higher balance to avoid fees. However, they could come with a higher APY.

Some MMAs even have tiered interest rates, allowing you to earn more by putting more money in. This means it's great for people who are able to maintain a higher balance in their bank account.

Just like savings accounts, MMAs also have limit of 6 transactions/withdrawals per statement cycle.

On April 24, 2020, the Federal Reserve Board removed the six-per-month limit on transfers or withdrawals from your savings or money market account. Banks and credit unions are not required to make changes, they may continue to restrict withdrawals.[2]

Which is better: a high-yield savings or money market account?
It depends on how much money you're depositing and how accessible you want it to be. High-yield savings accounts often have less requirements, so it's easier for anyone to start saving. Some money market accounts could be more versatile because there's debit card/check-writing, but they may have a higher minimum requirement.

  • Potential for higher interest rate
  • Could include debit card and/or check writing
  • Limited withdrawals
  • Could have higher account minimums

What is a CD Account?

A Certificate of Deposit requires you to deposit a fixed amount of money for a set period of time. In return, CDs often offer higher interest rates, at a fixed rate for the entire term. This means CDs are great for savers who want to lock in an interest rate.

Terms range from a few months to five years or longer, so you can choose the one best for your goals.

When you open a CD, you decide how much money to put into the account and how long you want it to stay there. You cannot add more funds. Some jumbo CDs get even higher interest rates, so individuals with a larger deposit would see a better return.

The catch is that you won't be able to access your money for the time that it's in a CD. You can request to withdraw it early, but you'll have to pay a penalty, which could eat into your interest earnings.

So it's ideal if you're saving for a long term goal and don't need access to your money for several months to several years at a time.

If interest rates rise, the money in the CD will be stuck at a lower rate. This means CDs that are too long-term can be a risk since you'll miss out on better rates.

  • Fixed interest rates
  • No fees (as long as you don't withdraw early)
  • Many term options
  • Low accessibility
  • Penalties for withdrawing early

What's the advantage of a CD over a savings or a money market account?
CDs give you guaranteed returns, and often have higher rates than both money market and savings accounts. If rates are high, you can lock in a high APY for the whole term, whereas the APY in savings account could drop at any time.

Can I Lose Money in a Savings or CD Account?

The risk of losing money in a savings or CD account is very low. As long as the bank or credit union is FDIC or NCUA insured, your money is safe. Both FDIC and NCUA insures your deposits up to $250,000 for an individual account or $500,000 for a joint account.[3][4]

The only instance you may lose money in a CD is if you withdraw funds very early before maturity. The early withdrawal penalty could eat into your interest earned, and in some cases, even a bit of the principal.

If you have a LOT to save, note that anything over $250,000 (for individuals) or $500,000 (for joint) won't be covered by insurance should the bank or credit union fail. In that case, it's best to split up your savings into different accounts at different banks.

How Much Can I Make On My Savings?

How much you can earn from your savings will depend on how much money you're depositing and how long you plan on keeping your money there.

To give you a better idea of exactly how much, check out our savings calculator:

Savings & Money Market Calculator


Ultimately, the right choice of account will depend on how frequently you need to access your money as well as how much you have to save.

If you're slowly saving money, a regular savings account or money market account will be good for you. If you have a chunk of money to save for a longer-term goal, a CD could be better so you "lock away" the funds.


  1. ^ Federal Reserve. Regulation D, Retrieved 8/25/2023
  2. ^ Federal Reserve Board. Federal Reserve Board announces interim final rule to delete the six-per-month limit, Retrieved 9/20/2023
  3. ^ FDIC. Your Insured Deposits, Retrieved 9/20/2023
  4. ^ NCUA. How Your Accounts are Federally Insured, Retrieved 9/20/2023

Write to Iggi Vargas at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

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