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Money market vs. certificate of deposit (certificate): what's the difference?

A money market account and a certificate of deposit (certificate) are two different types of accounts that are used for saving money. However, they are quite different in the way they are structured. For example, a money market account can be opened like a regular savings account and used to hold money at a higher interest rate than a regular savings account. Plus, money can be withdrawn several times each month from money market accounts.
A certificate account is opened for a specified period during which the account earns interest, and the money may not be withdrawn without penalty during this time. Certificate interest rates tend to be higher than money market interest rates.
At Credit Union of Southern California (CU SoCal), we make it easy to open a money market account!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.

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What is a money market account?

A money market account is a type of savings account offered by credit unions and banks. Money market accounts are sometimes called money market deposit accounts or money market savings accounts.
Money market accounts are interest-bearing accounts, meaning that interest is paid on the account balance. Most money market accounts come with a debit card and checks, to make financial transactions easier and more convenient.
There is no limit as to how much money you can have in your money market account.

What is a certificate of deposit?

A certificate of deposit is a type of savings account that holds a fixed amount of money for a fixed period (such as six months, one year, or five years), and in exchange, the financial institution pays you interest. When the term comes to an end and you cash-in your certificate, you receive the money you originally invested plus the interest. At credit unions, including CU SoCal, certificates of deposit are simply known as “certificates.”
The interest dividends earned on a certificate are compounded every month. Compound interest is interest that is earned on interest, so your money grows faster.
You can put as much as $250,000 into a certificate. At CU SoCal you can open a certificate with a minimum deposit of only $1,000, though some certificate require a higher opening balance.

Pros and cons of money market accounts

Like with all types of financial accounts there are pros and cons. Which types of accounts you choose should be based on your unique financial situation and goals.


Higher earning. Money market accounts can have a higher interest rate than a savings account, making them a good option if you need to set cash aside but keep it liquid.
Easier to access funds. Money market accounts let you withdraw your money at any time, and without restrictions on the length of time an account can be open.
Secure. All money market accounts are insured. If the account is held at a bank it is insured by the Federal Deposit Insurance Corporation (FDIC). A money market at a credit union is insured by the National Credit Union Administration (NCUA).


Limited Withdrawals. Although you can withdraw money from a money market, most financial institutions limit the number of withdrawals per month.
Account minimums. Money markets have a minimum account balance that must be maintained.
Fees. Failing to meet the monthly minimum account balance and exceeding the number of allowable withdrawals will result in penalty fees.
Variable interest. Money market rates are not fixed.

Pros and cons of certificates


Higher interest. Certificates typically earn higher interest as a perk for not having access to your money for a fixed period of time.

Choice of term lengths. Credit unions and banks offer terms from a few as three months to five years.

Fixed-interest. Certificates come with a locked-in interest rate, so you know exactly how much you’re earning.

No Fees. There are no fees to open a certificate.


Restricted access. Money cannot be withdrawn from a certificate during the specified term.

Penalties. If the money in a certificate absolutely must be withdrawn, the financial institution will charge you a penalty for not adhering to the account rules agreement.

How to decide between a money market account & a certificate

Now that you know the difference between a money market and certificate, you can think about which may work better for your financial goals.

Deciding whether to put your money in a money market or certificate account is a personal decision that should be made based on your income and monthly expenses.

When to choose a certificate

If you have a steady income, can cover your monthly expenses with ease, and will not need extra cash on-hand, then a certificate is a great choice for earning higher interest on your money. Short-term certificates of three, six, or nine months are available, so you can still earn higher interest without tying up your money for too long.

When to choose a money market account

These accounts are ideal if you need to keep your money liquid and you don’t mind earning less interest.

Why savvy consumers choose CU SoCal

For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.

Get Started on Your Money Market Account Today!

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Credit Union of Southern California (CU SoCal) is a leading financial institution empowering those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County to reach their goals and build strong financial futures. CU SoCal provides access to convenient money management services and offers competitive rates and flexible terms on auto loans, mortgages, and VISA credit cards—turning wishing and waiting into achieving and doing.


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