If you’re looking for ways to earn higher interest on your savings, Certificates of Deposit (CDs) and Money Markets are both great options in different ways!
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A CD is a type of savings account that offers a higher interest rate than regular savings accounts. They work by having you deposit a certain amount of money into the account for a set period of time; after which, you can either withdraw your money without penalty or renew your CD for another fixed duration.
CDs are offered with various terms – typically ranging from 6 months to 5 years. Additionally, most CDs also require a minimum deposit amount before you are eligible to open one, though this amount will vary depending on the financial institution. Overall, if you are looking to earn some extra interest while keeping your savings secure, then a certificate of deposit is an excellent option to consider.
If you want a more detailed look at what CDs are? I have just the thing for you.
A money market account, on the other hand, is a different type of savings account that also offers a higher interest rate compared to a standard savings account. There are also minimum balance requirements to open a Money Market, but the key difference between this type of account and a CD is you can access your savings at any point (as long as you keep the minimum requirement)
QUICK TIP: If you come across a money market fund, just know that it’s not the same as a money market account. Money market funds are managed by professional investors and aren’t insured by the FDIC or NCUA. Here’s some more info on money market funds. Check it out> |
There is a significant difference between CD rates and money market rates, since CDs typically offer higher returns but with greater restrictions and penalties for early withdrawals. Both CD and money market rates are determined in large part by the interest rate environment at any given time.
In general, interest rates tend to go up during periods of economic growth and down during times of recession or market uncertainty. Meaning, CD rates will change depending on fluctuations in the broader economy. However, once you open a CD account, the interest rate will not change until your term is up and you have the option to withdrawal or renew.
Overall, it is important to evaluate both CDs and money market rates before making a decision about where to keep your money.
QUICK TIP: Here’s a look at Skyla's CD and money market interest rates so you know what kind of return you could be receiving for your account. Psst… If you haven’t looked at certificate of deposit 101 yet, keep in mind there are different types of CDs out there. There's Jumbo CDs, IRA CDs, Traditional CDs (at Skyla, we simply call it regular CD accounts) and more. Check out Skyla’s rates > |
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There is no definitive answer to the question of whether it is better to use a CD or a money market account, since the right option will depend on your individual financial situation and goals. However, here are some key factors to consider when deciding between these two types of investment accounts:
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Ultimately, the most important thing is to find an investment strategy that matches your needs and allows you to achieve your long-term financial goals.
Deciding whether to get a CD or money market account really comes down to what your goals are and how much risk you're willing to take. If you want higher interest rates and can afford to tie up your money for a fixed period of time, then a CD is a good option for you.
However, if you need more flexibility with your funds or want immediate access to your cash, then a money market may be the better choice. Whichever account you decide on, we can help you open one that meets your needs.
Any of the wonderful staff at your local Skyla branch will be more than happy to help! Not near a branch or short on time? Then simply send us an email or give us a call at 704.375.0183, or open your account online.