$18,000 CD vs. $18,000 money market account: Which earns more interest now?
Summary
An $18,000 certificate of deposit (CD) generally earns more interest than an $18,000 money market account over one year, based on current fixed rates. However, the money market account offers easier access to funds and has a variable interest rate that could increase or decrease over time.Key Facts
- CDs have fixed interest rates that guarantee earnings over the chosen term.
- Money market accounts have variable rates that can change with market conditions.
- At current rates, a 1-year CD at 4.10% would earn about $738 in interest.
- An $18,000 money market account at 3.90% would earn about $702 in interest after one year.
- For shorter terms (3 months), CDs and money market accounts earn nearly the same interest.
- Money market accounts allow easier access to funds without penalties.
- Regularly adding money to a money market account may increase earnings through compounding interest.
- Savers should consider their need for access to funds and potential rate changes before choosing between CDs and money market accounts.
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