Write your artCreating an effective savings plan is not particularly difficult; however, it does require effort, planning, and commitment on your part. With banks and other financial institutions offers several investment options, potential investors must weigh their options carefully before signing any paperwork. A common decision many individuals and families must make is whether to choose a money market account over a CD. But what, exactly, is the difference between the two?

Well, money market accounts, also known as MMAs, are short-term investments with higher interest rates than standard savings accounts. They typically require a minimum balance and limit the withdrawals an account holder can make per month. Also, monthly service fees will apply in the minimum balance is not maintained. Fortunately, the FDIC insures MMAs, rendering them a low risk for potential investors.

On the other hand, a CD, or certificate of deposit, can vary in investment length. Ranging from one month to several years, CDs are also FDIC insured and considered low-risk. However, unlike MMAs, account holders will typically pay harsh monetary penalties for withdrawing from a CD. On the bright side, if you have no plans to touch this money and don't necessarily require it for your additional emergency savings, CDs might be a better option for you. They yield a predetermined interest rate for the specified (and fixed) period of time.

Whether you choose to invest your money in CDs or MMAs is a completely personal and often situational-driven decision. Either way, try to focus your savings strategy on maximizing your return. Be realistic about your needs and your ability to stick to your committed plan.
icle here

Learn more about this author, Krystle Hernandez.
Click here to send this author comments or questions.

---

Add your voice

Know something about Choosing money market funds over CDs?
We want to hear your view. Write now!