$50,000 short-term CD vs. $50,000 money market account: Here's which will earn more interest now
Summary
This article compares how much interest you can earn on $50,000 using short-term certificates of deposit (CDs) versus money market accounts. It explains that CDs generally offer slightly higher guaranteed returns, while money market accounts provide easier access to funds and variable interest rates.Key Facts
- A short-term CD locks in a fixed interest rate for up to 12 months.
- Money market accounts have variable rates that may change with the market.
- Example rates used: 3-month CD at 3.90%, 1-year CD at 4.11%, money market at 3.90%.
- Interest earned after one year on a $50,000 deposit is about $2,055 with a CD versus $1,950 with a money market account.
- CDs are generally more profitable but limit immediate access to money until maturity.
- Money market accounts allow easy access and check-writing but may earn less interest.
- One strategy is to split savings between both types to balance higher returns and flexibility.
- Interest rates are expected to remain stable for now, helping estimate earnings.
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