Is a CD or a money market account better now? Here's what 3 experts think.
There are opportunities to earn big returns on your savings, but you'll need to know which account makes sense.
The Federal Reserve held its benchmark rate steady at a range of 3.5% to 3.75% at its July meeting, but three Fed officials voted to raise it during the latest meeting, signaling potential rate hike pressure at the next gathering. This has led some analysts and experts to predict more rate hikes in the future, as indicated by the nearly 70% probability of a rate hike at the upcoming Fed meeting, according to the CME Group's FedWatch Tool.
U.S. Bank's senior vice president and head of everyday banking and borrowing, Derik Farrar, notes that the market expected multiple rate cuts in 2026, but no cuts have occurred, and the next move is likely an increase in interest rates.
The current high-yield environment, with certificates of deposit (CDs) and money market accounts offering rates around 4%, which is slightly above the current 3.5% inflation rate, makes it essential for savers to understand how these two accounts compare right now. Here's what three experts have to say:
CDs are generally a better option in today's interest rate climate, according to Jeff Judge, a managing partner and certified financial planner at Chesapeake Financial Planners. The guaranteed rate offered by CDs is a significant advantage, especially with CD rates still relatively high. Even if interest rates rise, the rate you lock in for a CD remains unchanged until it matures, providing stability and predictability.
However, experts caution that predicting future rate movements is uncertain, and savers should take advantage of today's high CD rates before they may change unfavorably.
On the other hand, a money market account could be a better choice for some savers due to its flexibility and potential for higher returns if interest rates rise. Unlike CDs, money market accounts have variable rates, meaning your rate can change over time, potentially increasing if the Fed raises rates later in the year. This feature provides an opportunity to earn more as rates fluctuate.
Additionally, money market accounts offer easy access to your funds, which can be beneficial if you're uncertain about when you might need to access your savings or if you expect rates to rise later in the year.
Written by urgent.news from CBS News's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
