Savings, MMA or CD: How Do I Know Which Is Best?

Thinking of putting money away but not sure what type of account to open? Here are some options.

When it comes to savings, keeping your money safe and earning a higher interest rate is important. Savings accounts, money market accounts(MMAs), and certificates of deposit (CDs) – called “share certificates” at credit unions – are all good ways to grow your savings, but they’re not all the same. We’ll look at the pros and cons of each so you can make a choice that works best for you and your money.

Savings Account

A savings account is a deposit account at a financial institution that you can add to and withdraw from. If you’re looking for convenience, you can link your savings to your checking account and set up automatic transfers to make saving easier.

The interest rate on your savings account depends on where you have the account and what type of account you open.


  • You’ll earn interest on your money, which generally isn’t an option with a standard checking account.
  • You’ll have easy access to your account through online banking and ATMs.


  • Withdrawals are often limited to six per month; any more than that will likely incur fees. The same applies with MMA’s.
  • Financial institutions generally charge a monthly maintenance fee for both checking and savings accounts. You can sometimes avoid paying these fees if you maintain a higher minimum balance.

Best Place to Save

  • If you’re saving for short-term goals, like an emergency fund or to make a specific purchase, you can consider a traditional savings account.

Money Market Account

Money market accounts function a lot like regular savings accounts. But unlike regular savings accounts, money market accounts come with other benefits. You can think of a money market account as a hybrid savings and checking account. MMAs generally pay higher interest than traditional savings accounts while giving you some of the flexibility of a checking account, including the ability to write checks.

NOTE: While they sound similar, don’t confuse money market accounts with money market funds, which are portfolios of investment securities, not financial institution accounts, and are not FDIC insured. With a money market fund, contributions are invested in fixed-income securities like U.S. Treasury bills or stocks.


  • You’ll earn a higher interest rate than you would with a traditional savings account.
  • Unlike with a certificate of deposit, there’s no required term, so you have more control over your money.
  • You can easily access your money by writing checks or with a debit card at an ATM.


  • Compared to savings accounts, you are generally limited to six transactions per month (there is often no limit on branch and ATM activity).
  • To avoid higher fees, you could be required to maintain a higher minimum balance when compared to a traditional savings account.

Best Place to Save

  • Money market accounts are a good choice for medium-term savings goals – like saving for a down payment, home improvements, and other big expenses – when you want easy and quick access to your funds. 

Certificate of Deposit

Certificates of deposit differ from savings and money market accounts in one major way: When you buy a CD, you’re saving for a set period of time. You’ll get a fixed rate of interest and can withdraw your money when the CD matures. You can also roll the total amount into a new CD.

CD terms generally range from three months to five years – though some are longer – and you can choose the term that best fits your savings goals. To maximize your earnings and avoid penalties, you can do what’s called “CD laddering,” in which you open multiple CDs with different maturity dates.


  • You’ll earn higher interest rates than with either savings or money market accounts.
  • Your rates are locked in for the entire term.
  • You get to choose the term length.


  • Less liquidity than with a savings or MMA. Access to your money is dictated by the term.
  • You’ll pay a fee if you withdraw funds before your CD matures. However, you may be able to find a no-penalty CD.

Best Place to Save

A certificate of deposit is a good way to save for long-term goals where you don’t need immediate access to your cash.

Safety and Risk

Savings accounts, money market accounts, and CDs are all safe options for your money and offer little risk. The trade-off is that you’ll generally earn a lower interest rate than you would if you put the money into higher-risk investments like stocks or bonds.


  • The money you put into a savings account, MMA, or CD is federally insured up to $250,000.
  • Your funds are accessible if you need to make a withdrawal.


  • The lower interest rate you’ll earn won’t keep pace with inflation.
  • Interest rates can fluctuate and may go down. 

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