Money Market vs Certificate: More ways to save
Updated August 30, 2024 | Published July 15, 2024
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Categories:
- Saving & Budgeting
There are more ways to save your money than just your average savings account. Did you know that Money Market accounts and Share Certificates can actually grow your savings at higher rates? We’ll explain how each of these accounts work so you can decide which one better fits your saving goals.
What is a Money Market Account?
A Money Market account is a way to save that can earn you higher rates than a savings account. But what you earn depends on how much money you have in the account. The rates follow a tiered structure, so if you deposit more, you’ll earn more. The highest tier Money Market accounts may have requirements that you need to meet to earn the highest rate available. Like our Money Market Plus Account, which requires you to also have a checking account, 1 direct deposit into that account per month, and 10 debit card transactions. If you don’t meet these requirements, you’ll earn our regular Money Market rates, which are still higher than a primary share savings.
This type of account allows flexibility as you can withdraw and deposit as frequently as you want with no limit or penalty in branch. However, there is an ATM withdrawal limit of 6 transactions per month. If your goal is for your money to grow, you’ll likely not want to withdraw funds very frequently, but we know that life can sometimes throw unexpected curveballs. So if you’re looking to earn more on your savings but still want flexibility, a Money Market account is a good choice for you.
What is a Share Certificate?
A certificate or “share certificate” is a deposit account offered by credit unions like Webster First which can earn even higher rates than a Money Market. It is a similar product to a certificate of deposit or “CD” that you may see offered by other financial institutions. They come in a variety of term lengths, and your interest rate is fixed for the duration of that term. This differs from money market account rates, which financial institutions can change according to prime rate.
Those high rates do come with a stipulation, though. You must leave the money in the account untouched for the duration of that term, otherwise face withdrawal penalties. Those penalties are determined by your term length. See our share certificates page for more information.
Once the term comes to an end your share certificate is considered “mature” and you can then choose to roll it over into a new certificate or withdraw the money. For more tips and strategies on certificate maturity, see What happens when my certificate matures?
If you have a decent amount of money to invest and you don’t plan on needing it any time soon, then a certificate would be a good choice for you. A certificate can also be a great account option to store money for long term goals like a child’s college fund. This way your money can continue to grow and rollover into new certificates, earning a high return until your child is old enough to use it.
Money Market vs Certificate
Consider whether or not you want the flexibility of having access to your money. If you have no need to withdraw in the near future, then you may want to choose a share certificate to maximize your earnings. Our certificates come in terms as short as 3 months, and as long as 60 months (5 years). Savvy investors may even strategize by having several certificates or varying terms opened at the same time, a strategy called “certificate laddering”. Learn more about this strategy and choosing your term here.
Review your financial situation to weigh which option works for you. If you need assistance, our knowledgeable staff is always there to help guide you toward the right financial decisions. Also see Money Market vs. Savings Account.
Business Money Market and Certificate Accounts
Own a business? We have options available for that too. Try out our Business Money Market or our limited time 4-month Elite Business Certificate Special.3
3Minimum balance to obtain these rates is $25,000 and cannot be transferred from an existing Webster First Federal Credit Union account. An Elite Business Checking account is required. Limited time offer. All rates subject to change without prior notice. Fees may reduce earnings.