Is a CD or a money market account better now? Here's what 3 experts think.
Summary
The Federal Reserve recently kept interest rates steady but some officials want to raise them, which could lead to higher returns on savings accounts. Experts say that certificates of deposit (CDs) and money market accounts both offer benefits now, with CDs providing a fixed rate and money market accounts offering easier access and variable rates that might increase.Key Facts
- The Fed kept interest rates between 3.5% and 3.75% in July, pausing changes for the fifth time in a row.
- Three Fed officials voted to raise the rate, signaling possible increases soon.
- Market tools suggest a nearly 70% chance of a rate hike at the next Fed meeting.
- CDs currently offer rates around 4%, which is above the 3.5% inflation rate.
- CDs give a guaranteed fixed interest rate until they mature, helpful for planned expenses.
- Money market accounts have variable rates and allow easier access to funds.
- Experts differ on which is better: some prefer CDs for locking in rates, others prefer money market accounts for flexibility.
- Many savers keep money in low-interest checking accounts, missing out on higher yields.
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