Key Differences

• Money Market Accounts (MMAs):
• Earn interest like savings accounts but offer flexibility (e.g., check-writing, debit cards).
• Interest rates are variable and may change over time.
• Usually require higher minimum balances.

• Funds can be accessed without penalties, though withdrawals are often limited to six per month.

• Certificates of Deposit (CDs):

• Offer higher fixed interest rates than MMAs.
• Require locking in funds for a set term (e.g., months or years).
• Early withdrawals result in penalties.
• Ideal for saving for a specific future expense.

When to Choose an MMA

• Flexibility matters: Regularly add or withdraw funds.
• Checking-like perks: Some MMAs offer ATM access or check-writing capabilities.
• Solid rates with access: Competitive rates for those seeking liquidity.

When to Choose a CD

• Higher yields: Lock in a better rate for savings.
• Risk minimization: Avoid market fluctuations while earning interest.
• Big-ticket goals: Secure funds for a future purchase, like a house or car.

When to Choose a Savings Account Instead

• Higher yield options: Online savings accounts often have better rates than MMAs.
• Lower balance requirements: Easier to open and maintain than MMAs or CDs.
• No restrictions: Flexible for emergency funds or frequent access.

Other Considerations

• Both MMAs and CDs are federally insured up to $250,000, ensuring safety.
• Banks often offer higher rates on CDs as a trade-off for limited access.
• MMAs and CDs both fit different savings goals; compare rates and features to choose the best option.

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