For guaranteed earnings: CDs  

How they work: A Certificate of Deposit is a type of savings account that earns a fixed interest rate for a set period of time. So for example, you might get a two-year CD with a 1.50% interest rate. Usually, CD rates are higher than savings or money market accounts, but you may have to shop around since rates are always changing. 

Good for: If you want to earn interest on money that you don’t need to access for a while, a CD gives you a guaranteed rate of return. For example, let’s say you have $5,000 saved up for a car but you know you’re not buying for at least 18 months. You might consider a 6-month or 1-year CD so the money is locked up, and you’ll get some extra earnings on top.  

What you should know: An important thing to remember is that with a CD you’re tying up a sum of money for a period of time. If you decide you want to withdraw from a CD early, you’ll be hit with a penalty fee. The other thing to be aware of is that once the CD term expires, it requires action on your part — or it will automatically be rolled into a new term. 

If the structured-saving of the CD sounds like a good option for you, try one of ours:

For “best of both worlds” savings: Money Market Account 

How they work: Money market accounts generate higher interest like a CD, but you can move funds in or out whenever you want, like a traditional savings account. Money markets have fluctuating interest rates that are usually higher than what regular savings accounts offer, and some introductory offers may guarantee a rate for a set amount of time. 

Good for: Money markets are good for people who want to earn higher interest on their funds, but also want to have access to those funds (which CDs do not allow for). 

What you should know: While account terms vary by institution, many money markets require a minimum deposit to open the account (which could be a few hundred or thousand dollars). Others might require that you maintain a minimum balance amount to avoid monthly fees. 

If you’re looking to make the most of your savings, our money market account is the solution for you:

Should You Open a Savings, a CD, or a Money Market account? 

Depending on your financial situation and goals, there may be points in your life when one type of savings account makes more sense for you. Or, you might decide to have all three types of savings accounts at once so you can enjoy the benefits of each. When deciding, think about your goals, how much interest you want to earn, and when and how often you’ll want to be able to access the funds. 

Most people open a traditional savings account when they’re starting from scratch. CDs can be worth looking into when you want to earn guaranteed interest on funds you know you won’t need for a while. But if you’d rather enjoy the benefits of a traditional account with a better interest rate, and without locking up your cash, a money market could provide that happy medium.