Have some extra cash lying around or sold some stock and have money in a brokers account in a money market account earning next to nothing? Why not place those funds in a savings account, bank money market account or certificate of deposit earning a higher interest rate than a brokerage account money market fund. Current savings account rates savingsaccount.monitorbankrates.com are better than MMA rates right now.
Certificates of deposit are debt instruments issued by banks, credit unions and other financial institutions to depositors. For lending the bank your money for a predetermined period of time, you are paid a fixed rate of interest, although some certificate of deposit accounts are variable rate like a savings account.
The fixed period of time in a CD account can have a period of a day to many years. The longer the maturity date on a CD account the higher the CD rate usually is. Positives to CD accounts include knowing how much interest(money) you will earn on the investment. Another positive is having the account insured for up to $250,000 by the Federal Deposit Insurance Corporation as long as you open a CD account with a bank that is a FDIC member.
The negatives to certificate of deposit accounts include a lower rate of return than most other investments. Another negative is if you lock your money into a long term CD and interest rates go higher the rate you receive doesn’t go higher unless you open a variable rate CD account. The alternative is to cash in the CD early and incur an early withdrawal penalty which will be some of the interest earned.
Money market accounts and savings accounts offer many of the same benefits as CD accounts. Plus some of these account tie in an ATM card you can use to get access to your money. Savings account rates and money market account rates can change at anytime, when interest rates are going higher this is good but when interest rates are going lower its not so good.
Depositing funds into a money market account or savings account is easy and you can withdrawal money easily as well. Though federal regulation limit the number of withdrawals to 6 per billing period.
CD Rates, savings rates and money market account rates will vary all the time. The longer the CD account term the better the CD rate usually is.