LendingClub High-Yield Savings

$2,500

Discover Bank Online Savings

0.40%Advertised Online Savings Account APY is accurate as of 02/12/2021

Citi Priority Checking

0.03%0.03% Annual Percentage Yield

LendingClub Rewards Checking

0.10%0.10% APY on balances of $2,500–$99,999

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If you’re looking for ways to save that will grow your money more quickly than a traditional savings account, it may be worth comparing a couple of common options: money market vs. CD.

It’s important to build a financial strategy that incorporates savings goals. And while traditional savings accounts are an option, they aren’t the only way to build up your funds. Money market accounts and certificates of deposit, or CDs, are other options that may help you earn more money through higher interest rates.

When you compare money markets and CDs, one option may stand out as a better fit for you. Your choice will likely depend on your specific needs, like access to your money or check-writing capabilities. And like any financial decision you make, it’s important to understand the positives and negatives of each type of deposit account.

Let’s look at some of the pros and cons of money market accounts vs. CDs.

What are money market accounts and how do they work?

Many banks and credit unions offer money market accounts, which are similar to both savings and checking accounts. These accounts earn interest, like savings accounts, while also providing some of the access you get with a checking account, though with some limitations. For example, withdrawals and payments via check, debit card, draft or electronic transfer are limited to six per month total for money market accounts. But withdrawals or payments done via ATM or in person, by mail, by messenger or via telephone check don’t count against that limit.

Pros of money market accounts

The deposits you put in a money market account earn interest. But rates can vary, so it’s wise to do some research to see which financial institutions offer the highest money market rates. At the end of July 2019, the national average interest rate for money market accounts was 0.18% for deposits less than $100,000 and 0.29% for deposits of $100,000 or more, according to the Federal Deposit Insurance Corporation.

A money market account is generally considered a low-risk savings option and can be insured by the FDIC if it’s at a bank. The National Credit Union Administration insures money market accounts at credit unions. When insured, the FDIC and NCUA cover money market accounts up to $250,000.

Let’s recap the pros of money market accounts.

• Higher earning: Interest rates typically higher than a traditional savings account
• Low risk: Insured by FDIC or NCUA
• Flexibility: Some features of a checking account

Cons of money market accounts

While money market accounts offer similar features to a checking account, those features are limited. For example, you can only withdraw money or make payments up to six times a month via check, debit card, draft or electronic transfer. But if you have more than six monthly transactions to make, know that making withdrawals at an ATM or payments on the phone doesn’t count against that limit.

Unpredictability can be another drawback. The interest rate on a money market account can fluctuate, while a regular savings account typically has a fixed rate you can depend on. Though with money market accounts that are tiered, you could earn more interest as your balance gets higher.

Money market accounts may also require you to maintain a minimum balance that may seem high. If your balance falls below the minimum, you could face account fees or other consequences on top of potentially earning less due to a lower balance if the account is tiered.

Let’s recap the cons of money market accounts.

• Minimums: Potential minimum deposit requirements
• Unpredictability: Typically have variable interest rate
• Limitations: Six total transactions allowed using a check, debit card, draft or electronic transfer

Common question: Are money market accounts related to money market mutual funds?

While the name is similar, money market accounts are different from money market mutual funds, which are investment options offered by investment companies. Because money market mutual funds are not insured by the FDIC or NCUA, there’s a greater risk you could lose money.

What are CDs and how do they work?

Offered by many banks and credit unions, a certificate of deposit is a unique type of savings account that requires you to keep the funds in the account for a set period of time.

CD terms are often anywhere from six months (short-term CDs) to five years or more (long-term CDs). At the end of the term, the CD “matures,” and you’ll receive the initial amount you put into the CD, plus the interest that accrued on that amount over the CD term. The rate of return you receive on a CD (and other types of deposit accounts) is the annual percentage yield, or APY.

Pros of CDs

Because the financial institution holds your money for a specific length of time, CDs typically offer higher interest rates compared to traditional savings accounts and some may offer higher interest than money market accounts. And the longer your CD term, the higher your interest rate is likely to be. For example, CDs for less than $100,000 earn on average 0.39% for a six-month term, 0.56% for a 12-month term, 0.86% for a 36-month term and 1.10% for a 60-month term, according to the most recent national data available from the FDIC.

Certificates of deposit also typically have fixed interest rates, so you know at the outset how much interest your investment will earn by the maturity date. There are exceptions, though. If you get a variable-rate CD, the interest rate can change according to rules the issuing bank or credit union will set and explain.

And like both a money market account and a savings account, a CD is generally considered a low-risk savings option because it’s insured by the FDIC or the NCUA for up to $250,000.

Let’s recap the pros of CDs.

• Predictability: Fixed interest rates (with exceptions)
• High earning: Higher rates than traditional savings accounts
• Low risk: FDIC or NCUA insured
• Flexibility: Different term lengths
• Less temptation: Funds locked for a set period of time, unavailable to spend

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Cons of CDs

CDs typically have a minimum amount that you’re required to deposit. The amount can vary widely, but it’s common to see minimums in the thousands, and they can venture into tens of thousands. And the higher-interest-rate CDs may require a higher minimum deposit amount.

Once you put your money into a CD, you probably won’t be able to withdraw it without penalty before the maturity date. That penalty may vary depending on the financial organization’s rules, including how long the money was held in the account. Make sure to learn the details of the early-withdrawal penalty in the terms and account agreement, keeping future needs in mind.

And take note: Some institutions offering high-yield CDs may not be completely honest. FINRA — the Financial Industry Regulatory Authority — has warned investors to be wary due to reports of organizations advertising high-yield CDs as bait to get people in the door.

These promos might get you to show up in person and then a representative might try to get you to invest a sizable amount of money ($25,000 or more) into an annuity that’s not insured and which is much riskier, according to a FINRA alert.

If you’re unsure about any financial opportunity, you can use BrokerCheck to help verify if the person and firm are registered with FINRA.

Let’s recap the cons of CDs.

• Minimums: Minimum deposit requirements
• Limitations: No access to your money while it’s in the CD
• Penalties: Costs for early withdrawals

Money markets vs. CDs

Money market accounts and CDs are both savings vehicles that can put your money to work for you, earning more interest than a traditional savings or checking account. Though a CD will likely have a higher interest rate than a money market account. To check and compare the most-recent interest rate data published by the FDIC for savings accounts, money market accounts, CDs and more, visit the FDIC online.

When looking at data, keep in mind that while CDs may earn more, you’ll be sacrificing flexibility, because the money will be required to stay in the account for a specific term or else you can face penalties for early withdrawal. With money market accounts, you can expect a lower interest rate, but you’ll gain regular access to your money and the ability to do things like write a few checks each month.

Bottom line

So when it comes to money market accounts vs. CDs, which is better? That’s all up to how you want your money to work for you.

It’s important to understand the pros and cons of money market accounts and CDs so that you can choose the savings vehicle that best meets your savings goals. For some people, the flexibility of a money market account wins hands-down. For others, the higher interest rates of CDs are a top priority.

There’s no one right or wrong answer for which type of savings vehicle is better. And your overall savings plan can include both a money market account and CDs. The important thing is to take as much advantage of savings opportunities as you can so that your money can grow and work harder for you.

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Chase CD rates

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A savings account is a place where you can store money securely while earning interest.

A savings account is a place where you can store money securely while earning interest.

LendingClub High-Yield Savings

Min. balance for APY

$2,500

Alliant Credit Union High-Rate Savings

Discover Bank Online Savings

APY

0.40%Advertised Online Savings Account APY is accurate as of 02/12/2021

These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.

These cash accounts combine services and features similar to checking, savings and/or investment accounts in one product. Cash management accounts are typically offered by non-bank financial institutions.

SoFi Money®

Wealthfront Cash Account

Capital One 360 CD

Capital One 360 CD

Checking accounts are used for day-to-day cash deposits and withdrawals.

Checking accounts are used for day-to-day cash deposits and withdrawals.

Chime Spending Account

One Spend

Citi Priority Checking

APY

0.03%0.03% Annual Percentage Yield

LendingClub Rewards Checking

APY

0.10%0.10% APY on balances of $2,500–$99,999

Money market accounts pay rates similar to savings accounts and have some checking features.

Money market accounts pay rates similar to savings accounts and have some checking features.

CIT Bank Money Market Account

Quontic Money Market Account

Axos Bank® High Yield Money Market

What to consider when opening CDs

Solid range of terms, but low rates

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Money market accounts are sometimes called money market deposit accounts or money market savings accounts.

Like a regular savings account, a money market account at a bank is insured by the Federal Deposit Insurance Corporation (FDIC), while one at a credit union is insured by the National Credit Union Administration (NCUA). You cannot withdraw money or make payments more than six times a month from a money market account by check, debit card, draft, or electronic transfer. Withdrawals or payments by ATM, in person, by mail, messenger, or telephone check (where payment is made by using your checking account number and bank routing number) do not count against the six-transaction limit. Your bank or credit union may also have a minimum deposit that it requires to open a money market account.

A money market account is different from a money market mutual fund, or a money market fund. Money market funds are offered by investment companies and others. Money market funds are not insured by the FDIC or the NCUA, which means you could possibly lose money investing in a money market fund.

The savings offers that appear on this site are from companies from which MoneyCrashers.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MoneyCrashers.com does not include all savings companies or all savings offers available in the marketplace.

No investment or savings vehicle is entirely without risk, but certificates of deposit (CDs) offer more security and predictability than most.

With fixed or upwardly adjustable interest rates, terms ranging from as short as one month to as long as 10 years, and FDIC insurance up to $250,000 per account, CDs are useful tools for saving funds you don’t need right away — and earning a yield in the meantime.

Although prevailing rates vary widely by bank, CDs tend to have higher yields (better rates) than other types of bank accounts, including checking, savings, or money market accounts.

The biggest drawback of CDs is that many are inflexible, with most banks charging a significant penalty if you withdraw part or all of your funds before the term ends. But some banks now offer special CDs that allow you to make midterm interest — and, in some cases, interest and principal — withdrawals without paying a penalty.

Best Banks for High-Yield CDs (Highest CD Rates)

If you’re on the hunt for above-average CD rates — annual percentage yields, or APYs — take a look at these banks and credit unions.

Unless otherwise noted, all have federal deposit insurance, meaning they’re insured by the FDIC or NCUA, the credit union equivalent. All have fixed interest rates on CDs and reasonable minimum deposit requirements. And most do not charge monthly fees, as is sometimes the case for online savings accounts that allow unlimited withdrawals.

1. CIT Bank

Yields Up to 0.50% APY; Variety of CD Types

CIT Bank is an online savings bank that pays excellent yields on longer-term CDs and offers special high rates on CDs with higher balances.

You can also open savings accounts here, although a lack of checking and money market accounts makes CIT Bank less than ideal for day-to-day banking needs.

• Regular CDs and Rates: CIT Bank offers eight regular CDs: six-month, one-year, 13-month, 18-month, two-year, three-year, four-year, and five-year. Yields apply on all balances above $1,000. The popular one-year and No Penalty CDs both yield 0.30%, with even higher interest rates (up to 0.50% APY) on longer-term CDs.
• Minimum Initial Deposit Requirement: $1,000 minimum deposit.
• Special CDs and Rates: CIT Bank has two notable special CD types. First, the No Penalty CD has an 11-month term, during which you can withdraw principal at any time without penalty. Its minimum deposit is $1,000. Second, the Jumbo CD requires a minimum opening deposit of $100,000 and comes in four terms ranging from two to five years, all of which have yields competitive with CIT’s mainline CDs.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: For principal withdrawals on all but the No Penalty CDs, CIT Bank charges an early withdrawal penalty of three months’ interest on terms under 12 months, six months’ interest on terms between 12 and 36 months, and 12 months’ interest on terms above 36 months. You can withdraw interest at any time.
• Other Features and Considerations: All CDs come with a grace period of 10 days, during which you can roll over into a new term or withdraw principal without penalty.

See our CIT Bank review for more information.

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2. Capital One Bank

Yields Up to 1.00% APY With No Minimum Balance Required

Capital One Bank is a full-service financial institution with some of the best CD rates and terms on the market today. The two clear winners here are the 24-month CD (0.70% APY) and the 60-month CD (1.00% APY). Both deliver category-leading yields with no minimum balance required.

• Regular CDs and Rates: Capital One Bank’s CD terms range from 6 months to 60 months. Rates range from 0.20% APY on the 6-month CD to 1.00% APY on the 60-month, with the standout 24-month CD earning a very solid 0.70% APY.
• Tax-Advantaged Retirement Account Options: Capital One offers traditional and Roth IRA CDs.
• Early Withdrawal Penalties: The early withdrawal penalty is 3 months’ interest on CDs with terms under 12 months and 6 months’ interest on CDs with longer terms.
• Other Features and Considerations: Capital One has a rate lock guarantee for all CDs funded within 10 days of opening.

3. Marcus by Goldman Sachs (Goldman Sachs Bank USA)

Yields Up to 0.80% APY; Low Minimum Balance

Marcus by Goldman Sachs, a subsidiary of Goldman Sachs Bank USA, is an online-only outfit best known for issuing personal loans for debt consolidation and home improvement. 

Although it’s relatively new to the deposit account game, it’s making up for lost time with some of the best CD rates around.

The high-yield savings account option is nothing to sneeze at, either. To maximize your interest earnings, check out Marcus’ CD laddering options, which promise even higher APYs when properly utilized.

• Regular CDs and Rates: Marcus offers nine CD options: six-month, nine-month, 12-month, 18-month, two-year, three-year, four-year, five-year, and six-year. Yields range from 0.15% annual percentage rate (APY) on the six-month to 0.80% APY on the six-year, with the heavily promoted 12-month product yielding 0.55% APY and the 60-month product yielding 0.80% APY.
• Minimum Initial Deposit Requirement: $500 for all CDs.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: You can withdraw a portion of your earned interest at any time without penalty, but Marcus charges for principal withdrawals made any time before maturity. The penalty is 90 days’ interest on CDs with terms under 12 months, 270 days’ interest on CDs with terms between 12 months and 5 years, and 365 days’ interest on the 6-year CD. These policies are subject to change at any time.
• Other Features and Considerations: You have 30 days to fully fund your CD, with the option to make multiple deposits during that time. There’s a 10-day grace period during which you can roll over your CD into a new term or withdraw principal without penalty. You’re guaranteed the best available rate during these 10 days.

See our Marcus by Goldman Sachs review for more information.

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4. American Express National Bank

Yields Up to 0.55% APY; No Minimum Balance

American Express is far better known for its extensive lineup of credit cards, but don’t sleep on its personal savings arm, which has carved out a name for itself as a purveyor of consistently high rates.

American Express National Bank (member FDIC) is among the country’s most attractive issuers of longer-term CDs, with yields consistently in the top quartile of the best CD rates. Maximize your interest income with easy-to-build CD ladders.

• Regular CDs and Rates: American Express National Bank has seven different CD options: six-month, 12-month, 18-month, 24-month, 36-month, 48-month, and 60-month. Yields range from 0.10% APY on the six-month CD to 0.55% on the 60-month product as of Jan. 11, 2021.
• Minimum Initial Deposit Requirement: No minimum deposit or balance requirement.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: You can withdraw interest at any time, but there’s an early withdrawal penalty associated with any withdrawal of principal before maturity. On CDs with terms under 12 months, the early withdrawal penalty is 90 days’ interest. It rises to 270 days’ interest on CDs with terms between 12 and 48 months, 365 days’ interest on CDs with terms between 48 and 60 months, and 540 days’ interest on CDs with terms longer than 60 months. These penalties are subject to change at any time.
• Other Features and Considerations: There’s a 10-day grace period during which you can roll over your CD into a new term, deposit additional principal, or withdraw principal and interest without penalty. After opening your CD, you have up to 30 days to deposit the necessary funds.

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5. First Internet Bank

Yields Up to 0.95% APY

First Internet Bank, known simply as First IB, is an Indianapolis-based online bank with solid long-term CD yields and several other deposit account types, including high-yield checking, money market, and savings accounts.

First IB’s short-term yields are among the best in the business, so this is a great place to park your money for a year or less.

• Regular CDs and Rates: First IB has eight different CDs: three-month, six-month, 12-month, 18-month, 24-month, 36-month, 48-month, and 60-month. Rates range from 0.25% APY on the three-month CD to 0.95% APY on the 60-month CD and apply on all balances above the minimum of $1,000.
• Minimum Initial Deposit Requirement: $1,000 minimum to open.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: You can structure any CD with a term of 12 months or above as a traditional or Roth IRA. Yields are identical to corresponding non-IRA CDs. Money market IRAs are also available.
• Early Withdrawal Penalties: First IB’s early withdrawal penalties apply to withdrawals of principal only. Depending on the CD term, they can be steep: 90 days’ interest for the three-month CD (in other words, all the interest you would have earned on the CD); 180 days’ interest for terms of six to 18 months; and 360 days’ interest for terms of 24 to 60 months. You can withdraw accumulated interest at any time without penalty.
• Other Features and Considerations: All First IB CDs come with a 10-day grace period after maturity (a standard period of time for post-maturity grace windows).

See our First Internet Bank review for more information.

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6. TIAA Bank

Yields Up to 0.85% APY

TIAA Bank is the banking arm of TIAA. TIAA got its start offering insurance and other financial products for nonprofit and government employees.

But its deposit accounts — including the CDs featured here, as well as checking, savings, and money market accounts — are available to members of the general public.

As at First IB, TIAA Bank’s short-term yields are off the charts.

• Regular CDs and Rates: TIAA Bank offers CDs with rates as high as 0.85% APY, depending on term.
• Minimum Initial Deposit Requirement: Minimum of $1,000 for all Basic CD accounts.
• Special CDs and Rates: TIAA offers two noteworthy special CD account types. The first, known as CDARS, is an account type that provides FDIC insurance on balances above $250,000. Yields are generally a bit lower than on standard CDs of equal term length. The second, the Bump Rate CD, is a 3.5-year CD that allows you to raise your yield once during the term should prevailing rates rise.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: For all CDs and CDARS, TIAA Bank charges an early withdrawal penalty equivalent to 25% of the total interest you’d earn over the term, regardless of when you ask for your money back. That means you could lose principal if you withdraw early in the CD’s term.
• Other Features and Considerations: There’s a 20-day maturity alert period, during which you can withdraw funds from your CD without penalty. 

See our TIAA Bank review for more information.

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7. Synchrony Bank

Yields Up to 0.85% APY

Synchrony Bank is an online-only financial institution that offers competitive CD yields, especially on longer-term and higher-balance accounts.

You can also hook up savings and money market accounts here, but there are no checking account options.

• Regular CDs and Rates: Synchrony Bank offers 12 CDs: three-month, six-month, nine-month, 12-month, 13-month, 14-month, 15-month, 18-month, 24-month, 36-month, 48-month, and 60-month. Yields range from 0.15% APY on the three-month to 0.85% APY on the 60-month.
• Minimum Initial Deposit Requirement: None.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: You can structure any Synchrony Bank CD as a traditional or Roth IRA. Yields may vary.
• Early Withdrawal Penalties: For both principal and interest withdrawals, Synchrony Bank levies an early withdrawal penalty of 90 days’ interest for CDs with terms of less than 12 months, and 180 days’ interest for terms of more than 12 months.
• Other Features and Considerations: There’s a 10-day grace period at maturity.

See our Synchrony Bank review for more information.

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8. Comenity Direct

Yields Up to 0.90% APY

Comenity Directis a consumer-friendly online bank with excellent yields on short- and medium-term CDs and an unusually high combined FDIC insurance coverage of $10 million per account holder.

Comenity’s flagship one-year CD earns a very strong 0.70% APY, while the two-year CD boasts a yield of 0.75%. For depositors seeking more flexibility, the Comenity Direct high-yield savings account is not to be missed.

• Regular CDs and Rates: Comenity Direct offers five CDs with terms ranging from one to five years. Rates range from 0.70% APY on the one-year CD to 0.90% APY on the five-year CD.
• Minimum Initial Deposit Requirement: $1,500 minimum for all CD accounts.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: None..
• Early Withdrawal Penalties: The early withdrawal penalty is 180 days’ interest for terms under four years and 365 days’ interest for terms of four years or greater.
• Other Features and Considerations: There’s a 10-day grace period at maturity, after which CDs automatically renew at then-current rates.

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9. Bank5 Connect

Yields Up to 0.85% APY; Low Minimum Balance

Bank5 Connect is an online-only bank that offers shorter-term online CDs with low minimum balances. Its special Investment CD is a good deal if you want to be able to make multiple CD deposits without opening a new account.

You can also find checking and savings accounts here, but retirement options are lacking. The 12-month CD’s industry-leading yield is particularly attractive for short-term savers.

• Regular CDs and Rates: Bank5 Connect offers five regular CDs, known as Connect CDs: six-month, 12-month, 18-month, 21-month, and 36-month. There are no interest rate tiers here — these rates apply to all balances above the minimum deposit. Yields range from 0.35% APY on the six-month CD to 0.85% APY on the 36-month.
• Minimum Initial Deposit Requirement: $500 minimum.
• Special CDs and Rates: Bank5 Connect offers a special Investment CD with a 24-month term. Unlike a regular CD, you can make as many deposits as you wish during this CD’s term. Each new deposit begins earning interest as soon as you make it.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: For all withdrawals (interest and principal), Bank5 Connect charges an early withdrawal penalty of three months’ interest (90 days of interest) on terms under 12 months and six months’ interest (180 days of interest) on terms over 12 months.
• Other Features and Considerations: If your CD has a balance of over $250,000, it’s covered by the Depositors’ Insurance Fund, a privately funded insurance scheme that protects all deposits at Massachusetts-chartered banks above the FDIC deposit insurance limit.

See our Bank5 Connect review for more information.

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10. Ally Bank

Yields Up to 0.80% APY; No Minimum Balance

Ally Bank is a popular online-only bank that offers solid regular CD yields and special CDs with flexible features and top rates for their respective categories.

It also has a full range of deposit accounts, including high-yield checking, savings, and money market accounts, plus an auto lending arm and 24/7 customer service.

• Regular CDs and Rates: Ally Bank offers seven regular CDs: three-month, six-month, nine-month, 12-month, 18-month, three-year, and five-year. Yields range from 0.20% APY on the three-month CD to 0.80% APY on the five-year.
• Minimum Initial Deposit Requirement: No minimums or maximums on any CDs, including special CDs, but some CDs incentivize higher opening deposits with high yields for the term.
• Special CDs and Rates: Ally offers two special CD types. The No Penalty CD comes with an 11-month term and yields marginally less than regular CDs with equal terms, subject to rate tiers (yields increase in proportion to the balance). You can withdraw principal and interest at any time from this CD without penalty. The Raise Your Rate CD comes with a term of two or four years. If Ally increases its posted interest rates on new CDs with the corresponding term length during your term, you have the option to raise your own CD’s rate to the new rate either once (for the two-year CD) or twice (for the four-year CD). Raise Your Rate products’ yields are competitive with regular Ally CDs.
• Tax-Advantaged Retirement Account Options: You can structure any regular Ally Bank CD as a traditional, Roth, or SEP IRA.
• Early Withdrawal Penalties: Regular and Raise Your Rate CDs come with early withdrawal penalties ranging from 60 days’ interest to 150 days’ interest, but you can withdraw interest at any time.
• Other Features and Considerations: There’s a 10-day grace period upon maturity. Ally Bank also offers a 10-day rate guarantee on all CDs, including special ones. If rates on new CDs with a particular term rise within 10 days after you open a CD with that term, you’ll lock in the higher rate until maturity.

See our Ally Bank review for more information.

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11. Sallie Mae Bank

Yields Up to 0.70% APY

Sallie Mae is famous for its lineup of undergraduate and graduate student loans, but it also has a banking arm that offers excellent yields on medium- and longer-term CDs, starting at about the one-year CD.

You can also open money market and savings accounts with competitive yields here, plus the goal-oriented SmartyPig account, which incentivizes regular savings. Sallie Mae Bank’s short-term yields are noteworthy.

• Regular CDs and Rates: Sallie Mae Bank offers 11 CD options: six-month, nine-month, 11-month, 12-month, 13-month, 15-month, 18-month, 24-month, 30-month, 36-month, and 60-month. Yields apply on all balances above the minimum deposit of $2,500 and range from 0.30% APY on the six-month CD to 0.60% or 0.70% APY on the longer-term products.
• Minimum Initial Deposit Requirement: $2,500 to open.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: For CDs with terms of 12 months or less, Sallie Mae levies an early withdrawal penalty equal to 90 days’ interest. For CDs with longer terms, the penalty is 180 days’ interest. These penalties apply to principal withdrawals only. You can withdraw interest at any time.
• Other Features and Considerations: All CDs come with a 10-day grace period at maturity.

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12. My eBanc

Yields Up to 0.65% APY; Multiple CD Options

My eBanc is the online arm of BAC Florida Bank, a Miami-based company that caters to international depositors in Latin America and the Caribbean.

All of its accounts — including CDs, checking, savings, and money market accounts — are available to U.S. customers too, with exceptional short-term yields.

BAC Florida Bank refers to its CDs as “Time Deposits.”

• Regular CDs and Rates: My eBanc offers five regular Time Deposits: six-month, 12-month, 18-month, 24-month, and 36-month. Yields apply on all balances above the $5,000 minimum and range from 0.40% APY on the six-month product to 0.65% APY on the 24- and 36-month CDs.
• Minimum Initial Deposit Requirement: For regular Time Deposits, the minimum opening deposit is $5,000. Higher minimum deposits apply to Jumbo and Flex products (described below).
• Special CDs and Rates: My eBanc has two specialty products: Jumbo Time Deposits and Flex Time Deposits. Jumbo Time Deposits require a minimum opening deposit of $100,000 but otherwise mirror regular Time Deposits’ yields and terms. The single Flex Time Deposit option is a 12-month product with a mediocre yield. You’re allowed two withdrawals during this term, up to the cumulative principal and interest earned to date. The Flex Time Deposit requires a minimum opening deposit of $10,000.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: BAC Florida Bank charges three months’ interest for early withdrawals (principal and interest) on Time Deposits with terms of 12 months or less, and six months’ interest on withdrawals from Time Deposits with terms above 12 months. When your Time Deposit matures, you can receive the accrued interest even if you choose to roll it over into a new term.
• Other Features and Considerations: All Time Deposits come with a 20-day grace period at maturity.

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13. Discover Bank

Yields Up to 1.00% APY

Owned by Discover Financial Services, which also oversees the Discover family of credit cards,Discover Bank features a wide range of CD terms with attractive yields.

It also offers savings and money market accounts, plus 24/7 customer service and access to about 60,000 fee-free ATMs nationwide.

If your credit qualifies, check out Discover’s lineup of cash-back and travel rewards credit cards, like the Discover it Cash Back Card and the Discover it Miles Credit Card.

• Regular CDs and Rates: Discover Bank offers 12 different CDs: three-month, six-month, nine-month, 12-month, 18-month, 24-month, 30-month, three-year, four-year, five-year, seven-year, and 10-year. Yields range from 0.20% APY on the three-month CD to 1.00% APY on the five-year, seven-year, and 10-year products.
• Minimum Initial Deposit Requirement: Minimum of $2,500.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: You can structure any CD as a traditional or Roth IRA.
• Early Withdrawal Penalties: Discover Bank allows you to withdraw accumulated interest at any time without penalty. However, if you want to withdraw any of your CD’s principal, you must pay an interest penalty. Penalties are three months’ interest on terms under 12 months, six months’ interest on terms between 12 and 36 months, nine months’ interest on the four-year CD, 18 months’ interest on the five-year CD, and 24 months’ interest on the seven- and 10-year CDs.
• Other Features and Considerations: For non-IRA CDs, Discover Bank offers a 10-day rate guarantee. However, this option isn’t available with IRA CDs. At maturity, there’s a nine-day grace period where you can decide whether to roll over the CD into an identical term, change its term, or withdraw your funds entirely.

See our Discover Bank review for more information.

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14. Barclays

Yields Up to 0.25% APY; Very Low Minimum Balance

Barclays Bank offers nine longer-term CDs that can go head-to-head with comparable products from virtually any competing deposit institution.If you need a more flexible option, the high-yield savings account is fantastic too.

And Barclays has a nice CD laddering option for customers looking to spread their savings across multiple accounts and maximize their interest earnings.

• Regular CDs and Rates: Barclays has nine CD options: three-month, six-month, nine-month, 12-month, 18-month, 24-month, 36-month, 48-month, and 60-month. Yields range from 0.10% APY on the three-month CD to 0.25% APY on the 12-month, 18-month, and 24-month products.
• Minimum Initial Deposit Requirement: None, but your deposit must be sufficient to earn interest at computed rates.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: You can withdraw interest at any time without penalty. /Barclays charges 90 days’ interest for early principal withdrawals on CDs with terms under 24 months and 180 days’ interest on CDs with longer terms. These penalties are subject to change at any time.
• Other Features and Considerations: There is a 14-day grace period during which you can withdraw principal and interest without penalty or roll your CD over into a new term. Barclays has a 30-day maturity alert window, meaning you have up to 44 days to decide what to do with each maturing CD.

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15. AbleBanking

Yields Up to 0.20% APY; supports a charitable organization of your choice

AbleBanking is the Maine-based online arm of Northeast Bank, which has physical branches in New England.

AbleBanking is unusual for its focus on supporting charitable and religious organizations. It’s the only known bank that pays each customer’s account opening bonus to the charity of their choosing, for instance.

In addition to CDs with competitive rates, you can also find money market accounts here.

• Regular CDs and Rates: AbleBanking has five CD products: six-month, one-year, two-year, three-year, and four-year. Yields apply on all balances above $500 and range from 0.10% to 0.20% APY, depending on term.
• Minimum Initial Deposit Requirement: $1,000 to open. Of note: AbleBanking has a low $240,000 maximum deposit on CDs.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: None.
• Early Withdrawal Penalties: AbleBanking charges an early withdrawal penalty of 90 days’ interest for CDs with terms under 36 months and 180 days’ interest for CDs with terms of 36 and 48 months. You can withdraw accrued interest at any time.
• Other Features and Considerations: All new ableBanking deposit accounts, including CDs, come with a $25 bonus that ableBanking donates to the nonprofit organization of your choosing. If you wish, ableBanking can also make charitable gifts using your accrued interest. All CDs come with a 30-day grace period at maturity.

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16. Axos Bank

Yields Up to 0.20% APY; Low Minimum Balance

Axos Bank is a full-service, online-only bank that provides decent CD yields and offers a range of deposit accounts for your one-stop banking needs.

• Regular CDs and Rates: Axos Bank offers seven CD options with good rates: three-month, six-month, 12-month, 24-month, 36-month, 48-month, and 60-month. Yields apply on all balances above the $1,000 minimum deposit amount and currently sit at 0.20% APY for all products.
• Minimum Initial Deposit Requirement: $1,000 to open.
• Special CDs and Rates: None.
• Tax-Advantaged Retirement Account Options: Axos Bank offers Roth and traditional IRA options on three CD accounts: 12-month, 24-month, and 36-month.
• Early Withdrawal Penalties: Axos Bank’s penalties for early principal withdrawal are as follows: 45 days’ interest for the three-month, three months’ interest for the six-month, six months’ interest for the 12-month, 12 months’ interest for the 24-month, 18 months’ interest for the 36-month, and 24 months’ interest for the 48-month. You can withdraw interest at any time.
• Other Features and Considerations: All CDs come with a 10-day grace period followed by automatic renewal.

See our Axos Bank review for more information.

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Final Word

FDIC-insured CDs offer the opportunity to exploit the power of compound interest and earn a predictable yield for a fixed period. These banking products can be essential to a well-designed emergency fund. But most demand commitment.

Before you put your money in a CD, you should confirm that you can afford to tie up those funds for the entire CD term — or that the issuer allows early withdrawals without penalty (as is the case with Ally Bank, for instance). Just remember that even where early withdrawals are permitted, CDs rarely come with debit cards or other means to readily access funds.

If you’re forced to withdraw your money from an inflexible CD before the maturity date, especially if it’s still early in the CD’s term, interest penalties may eliminate some or all of your yield. That dampens the power of compound interest to grow your balance. Where penalties are particularly harsh, an early withdrawal could even cut into your principal.

If you haven’t already, determine how much you can comfortably save by creating a household budget that accounts for all your income and expenses, as well as potential uncertainties that could affect your finances in the future.

Editorial Note: Credit Karma receives compensation from third-party advertisers, but that doesn’t affect our editors’ opinions. Our marketing partners don’t review, approve or endorse our editorial content. It’s accurate to the best of our knowledge when posted.

If you’re looking for ways to save that will grow your money more quickly than a traditional savings account, it may be worth comparing a couple of common options: money market vs. CD.

It’s important to build a financial strategy that incorporates savings goals. And while traditional savings accounts are an option, they aren’t the only way to build up your funds. Money market accounts and certificates of deposit, or CDs, are other options that may help you earn more money through higher interest rates.

When you compare money markets and CDs, one option may stand out as a better fit for you. Your choice will likely depend on your specific needs, like access to your money or check-writing capabilities. And like any financial decision you make, it’s important to understand the positives and negatives of each type of deposit account.

Let’s look at some of the pros and cons of money market accounts vs. CDs.

What are money market accounts and how do they work?

Many banks and credit unions offer money market accounts, which are similar to both savings and checking accounts. These accounts earn interest, like savings accounts, while also providing some of the access you get with a checking account, though with some limitations. For example, withdrawals and payments via check, debit card, draft or electronic transfer are limited to six per month total for money market accounts. But withdrawals or payments done via ATM or in person, by mail, by messenger or via telephone check don’t count against that limit.

Pros of money market accounts

The deposits you put in a money market account earn interest. But rates can vary, so it’s wise to do some research to see which financial institutions offer the highest money market rates. At the end of July 2019, the national average interest rate for money market accounts was 0.18% for deposits less than $100,000 and 0.29% for deposits of $100,000 or more, according to the Federal Deposit Insurance Corporation.

A money market account is generally considered a low-risk savings option and can be insured by the FDIC if it’s at a bank. The National Credit Union Administration insures money market accounts at credit unions. When insured, the FDIC and NCUA cover money market accounts up to $250,000.

Let’s recap the pros of money market accounts.

• Higher earning: Interest rates typically higher than a traditional savings account
• Low risk: Insured by FDIC or NCUA
• Flexibility: Some features of a checking account

Cons of money market accounts

While money market accounts offer similar features to a checking account, those features are limited. For example, you can only withdraw money or make payments up to six times a month via check, debit card, draft or electronic transfer. But if you have more than six monthly transactions to make, know that making withdrawals at an ATM or payments on the phone doesn’t count against that limit.

Unpredictability can be another drawback. The interest rate on a money market account can fluctuate, while a regular savings account typically has a fixed rate you can depend on. Though with money market accounts that are tiered, you could earn more interest as your balance gets higher.

Money market accounts may also require you to maintain a minimum balance that may seem high. If your balance falls below the minimum, you could face account fees or other consequences on top of potentially earning less due to a lower balance if the account is tiered.

Let’s recap the cons of money market accounts.

• Minimums: Potential minimum deposit requirements
• Unpredictability: Typically have variable interest rate
• Limitations: Six total transactions allowed using a check, debit card, draft or electronic transfer

Common question: Are money market accounts related to money market mutual funds?

While the name is similar, money market accounts are different from money market mutual funds, which are investment options offered by investment companies. Because money market mutual funds are not insured by the FDIC or NCUA, there’s a greater risk you could lose money.

What are CDs and how do they work?

Offered by many banks and credit unions, a certificate of deposit is a unique type of savings account that requires you to keep the funds in the account for a set period of time.

CD terms are often anywhere from six months (short-term CDs) to five years or more (long-term CDs). At the end of the term, the CD “matures,” and you’ll receive the initial amount you put into the CD, plus the interest that accrued on that amount over the CD term. The rate of return you receive on a CD (and other types of deposit accounts) is the annual percentage yield, or APY.

Pros of CDs

Because the financial institution holds your money for a specific length of time, CDs typically offer higher interest rates compared to traditional savings accounts and some may offer higher interest than money market accounts. And the longer your CD term, the higher your interest rate is likely to be. For example, CDs for less than $100,000 earn on average 0.39% for a six-month term, 0.56% for a 12-month term, 0.86% for a 36-month term and 1.10% for a 60-month term, according to the most recent national data available from the FDIC.

Certificates of deposit also typically have fixed interest rates, so you know at the outset how much interest your investment will earn by the maturity date. There are exceptions, though. If you get a variable-rate CD, the interest rate can change according to rules the issuing bank or credit union will set and explain.

And like both a money market account and a savings account, a CD is generally considered a low-risk savings option because it’s insured by the FDIC or the NCUA for up to $250,000.

Let’s recap the pros of CDs.

• Predictability: Fixed interest rates (with exceptions)
• High earning: Higher rates than traditional savings accounts
• Low risk: FDIC or NCUA insured
• Flexibility: Different term lengths
• Less temptation: Funds locked for a set period of time, unavailable to spend

FAST FACTS

What is a CD rollover?

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Cons of CDs

CDs typically have a minimum amount that you’re required to deposit. The amount can vary widely, but it’s common to see minimums in the thousands, and they can venture into tens of thousands. And the higher-interest-rate CDs may require a higher minimum deposit amount.

Once you put your money into a CD, you probably won’t be able to withdraw it without penalty before the maturity date. That penalty may vary depending on the financial organization’s rules, including how long the money was held in the account. Make sure to learn the details of the early-withdrawal penalty in the terms and account agreement, keeping future needs in mind.

And take note: Some institutions offering high-yield CDs may not be completely honest. FINRA — the Financial Industry Regulatory Authority — has warned investors to be wary due to reports of organizations advertising high-yield CDs as bait to get people in the door.

These promos might get you to show up in person and then a representative might try to get you to invest a sizable amount of money ($25,000 or more) into an annuity that’s not insured and which is much riskier, according to a FINRA alert.

If you’re unsure about any financial opportunity, you can use BrokerCheck to help verify if the person and firm are registered with FINRA.

Let’s recap the cons of CDs.

• Minimums: Minimum deposit requirements
• Limitations: No access to your money while it’s in the CD
• Penalties: Costs for early withdrawals

Money markets vs. CDs

Money market accounts and CDs are both savings vehicles that can put your money to work for you, earning more interest than a traditional savings or checking account. Though a CD will likely have a higher interest rate than a money market account. To check and compare the most-recent interest rate data published by the FDIC for savings accounts, money market accounts, CDs and more, visit the FDIC online.

When looking at data, keep in mind that while CDs may earn more, you’ll be sacrificing flexibility, because the money will be required to stay in the account for a specific term or else you can face penalties for early withdrawal. With money market accounts, you can expect a lower interest rate, but you’ll gain regular access to your money and the ability to do things like write a few checks each month.

Bottom line

So when it comes to money market accounts vs. CDs, which is better? That’s all up to how you want your money to work for you.

It’s important to understand the pros and cons of money market accounts and CDs so that you can choose the savings vehicle that best meets your savings goals. For some people, the flexibility of a money market account wins hands-down. For others, the higher interest rates of CDs are a top priority.

There’s no one right or wrong answer for which type of savings vehicle is better. And your overall savings plan can include both a money market account and CDs. The important thing is to take as much advantage of savings opportunities as you can so that your money can grow and work harder for you.

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