Money Market vs. Certificate: How to Choose
Make the most of your money by choosing the savings option that’s best for you! Not sure how to grow your funds? Learn more about the benefits of a Money Market account or Certificate below.
What is a Money Market account?
A Money Market account, offered by banks and credit unions, is a type of account that tends to pay you higher interest rates than other types of savings accounts. While Money Market accounts may require a minimum amount to be deposited, they offer tiered interest rates that help you earn more as you save more. Plus, they’re insured by the NCUA. Learn more about Money Market accounts.
What is a Certificate?
A Certificate, offered by banks and credit unions, allows you to place funds in an account for a predetermined amount of time. The longer your certificate term is, typically you can expect a higher rate of return. Certificates are federally insured by the NCUA and offer terms from 3 months to several years. Additionally, Certificates come in a variety of types including Standard, Bump Rate, Add-Ons, and Jumbo Certificates. Learn more about Certificates.
How do I choose between a Money Market account or Certificate?
When deciding how to make the most of your money, it’s best to know your goals, know your spending habits, and understand what money you have to work with. That’s why we recommend starting by making a budget. This proactive approach will allow you to manage your money effectively and help you make an informed decision.
Based on your budget you might ask yourself a few questions:
- What are my spending habits?
When you’re naturally a spender, it’s not easy to be a saver. So, if you want your saved money to be just out of reach and you want to earn a higher rate, a Certificate might be right for you.
- Am I looking to achieve short-term or long-term savings goals?
For those with short-term savings goals, Money Market accounts might make more sense. They provide a balance between high interest rates and liquidity, often offering better interest rates than regular savings accounts while allowing you to still access your funds more easily than other investment options.
For those with long-term goals, a Certificate might be right for you. Certificates offer terms anywhere from a few months to 5 years, allowing you to create a more long-term savings plan.
- How much money do I have to work with?
If you are working with a modest sum, an Add-On Certificate might be a good option. Add-On Certificates allow you to transfer over any extra funds you have at a given time allowing you to start investing with minimal funds while ultimately helping your money grow over time.
For those working with large sums, consider a Jumbo-Certificate. While Jumbo-Certificates have a higher opening balance, they offer competitive interest rates that can help you grow your funds.
- How often do I need to access my funds?
If you want the option to add and withdraw money regularly, consider a Money Market account. Because Money Market accounts offer checking account-like perks but with higher interest rates, they make a great option for those looking for liquidity in their assets.
If you do not need regular access to your funds, a Certificate might be the right option for you. Certificates lock your funds in for a set period of time, storing money away to help you reach your savings goals.
We know that making these types of decisions can be challenging, and we want you to know that we are here to help! Don’t hesitate to reach out to our team with any questions you may have. Together it’s possible.