CD vs Money Market Account: Rates, Access and Safety
Short answer. A certificate of deposit holds your money for a fixed term at a fixed rate, and withdrawing early usually costs a penalty. A money market account pays a variable rate and lets you take money out, within limits, any time. Both are covered by FDIC or NCUA insurance up to the legal limit at insured institutions.
Side by side
| Certificate of deposit (CD) | Money market account | |
|---|---|---|
| Rate | Fixed for the term | Variable; changes with the market |
| Access to money | Locked until maturity; early-withdrawal penalty | Liquid; some accounts limit transactions |
| Typical term | Months to 5 years | No fixed term |
| Deposits | Usually one lump sum | Add money any time |
| Insurance | FDIC / NCUA up to the limit per depositor, bank and category | Same |
| Best when rates | Are expected to fall | Are expected to rise |
| Typical use | Money with a known date, e.g. a down payment | Emergency fund, cash you may need |
Which one fits you?
Lean towards Certificate of deposit (CD) if…
- you know when you will need the money
- you want to lock a rate before it falls
Lean towards Money market account if…
- you may need the money at short notice
- you want your rate to follow rising rates
Frequently asked questions
Which pays more?
It depends on the market and the provider; CDs often pay more for longer terms, but online money market accounts can compete. Compare current APYs.
Is a money market account the same as a money market fund?
No. An account at a bank is deposit-insured; a money market fund is an investment fund and is not FDIC insured.
What is a CD ladder?
Splitting money across CDs with staggered maturities so some mature regularly, balancing rate and access.
General education, not personal financial advice. Figures are typical US examples and vary by provider and year.