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Certificate or Money Market – Finding the Right Savings Option for You

August 15, 2023

When building your savings, it is important to choose an account that offers a competitive interest rate to best grow your money, but also one that will allow you to access your funds should you need to.

Money market accounts and share certificates (or certificates of deposit) each provide a boost to your savings by offering competitive rates but differ in how liquid — the ability to be converted into cash easily at any time — they are. Both accounts are readily available and can be found at credit unions, traditional banks, and online-only banks, providing consumers with many options.

How money market accounts work.

A money market account is a safe place to stash your money at federally insured financial institutions. These accounts can pay you competitive interest rates and can boost your overall savings. Money market accounts typically pay variable interest rates, which means the rate can rise and fall depending on market conditions.

In general, these funds are accessible and make it relatively easy for you to retrieve your savings a few times each month, though there may be limits to how many times you can move money out. Typically, the cap limits withdrawals to six a month, though some financial institutions allow more, following a move by the Federal Reserve to relax the limit in response to the Coronavirus pandemic. Check with your financial institution to confirm its withdrawal and transfer policies.

Money market accounts typically come with a debit card and/or checkbook, making it easier to access your funds should the need arise.

How certificates work.

A share certificate (certificate of deposit, or CD) is another type of federally insured savings’ account easily found at credit unions and banks. Certificates pay a fixed interest rate for a set period of time. In exchange for agreeing to secure your money for an agreed period, credit unions and banks agree to pay a set yield for the length of the certificate term, typically three months to five years. Longer-term certificates, such as five-year certificates, tend to pay higher rates than shorter-term certificates, like six-month certificates and one-year certificates. Unlike money market accounts, however, certificates don’t offer the flexibility of easy access to your funds.

No matter what term you choose, you can use Town & Country Federal Credit Union’s certificate calculator to see just how much interest you’ll earn.

When money market accounts are a better fit.

A money market account is a good way to grow your savings, but it’s not the best fit for everyone. Here are two situations when a money market account makes sense.

You want easy access to your funds.

A money market account allows you to spend or transfer funds a few times each month or statement period. Though monthly transaction limits typically apply, most consumers will find it’s possible to work within those guidelines to cover any emergency expenses.

A money market account is a better choice than a CD if you’re looking for someplace to stash an emergency fund and may need immediate access to it. CDs are subject to an early withdrawal penalty, should you decide to take funds out of a CD before its term ends.

You’re looking for a short-term boost to savings.

Money market accounts often offer competitive interest rates and provide a better return than a traditional savings account. For example, a higher APY (Annual Percentage Yield) can go a long way toward helping you achieve a short-term savings goal, such as a vacation, wedding, or new computer. With a money market account, you’re able to grow your savings more quickly without risking any principal while still maintaining easy access to your funds.

When certificates are a better fit.

Here are two cases when a CD might be a good option.

You have a long-term plan for these funds.

Certificates, with their set terms, are an easy way to impose some financial discipline, since withdrawing money before the end of a term comes with a penalty.

When you open a certificate, you are choosing to lock your funds away for a specified period. Depending on the term, it might range from a few months to several years. If you have a specific plan for these funds — and won’t need to tap them in an emergency — then a certificate might be a good fit.

If you plan to buy a house in five years, for example, then a certificate could be the right place to stash a down payment, allowing you to take advantage of the most competitive interest rates while still providing access to the funds when you are ready to purchase your home. Plus, there’s no worry about losing money, unlike investing in stocks or other types of nonguaranteed investments.

If you would like to learn more about some of the savings options available at Town & Country that can help you reach your financial goals, you can connect with a member services representative by emailing us at, calling 800-649-3495 or book a consultation here.

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