Key Takeaways

• • • You can earn more interest on your savings with a CD or money market account than with a regular savings account.
    • Both CDs and money market accounts have pros and cons. Consider both before opening an account.
    • Think about your savings goals and how you usually spend money to help make your choice.

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    Congratulations—you’ve saved up some money and you’re ready to make the most of it! Figuring out how takes a bit of consideration. To make the best choice, think about how long you can keep your money saved, if you want to add more money and how much extra money (interest) you want to earn.

    Let’s compare CDs and money market accounts. Both are easy to open, usually give you more interest than a regular savings account, and are safe. However, they differ in a few key ways.

    First, what’s the difference?

    A CD (or certificate of deposit) is an account where you deposit money for a fixed period—generally three months to five years—that earns a fixed interest rate (meaning the interest doesn’t change). Usually, you can’t add to your CD after the initial deposit and you’ll pay a penalty if you withdraw money early.

    A money market account (MMA) is a savings account that earns interest at a variable rate (meaning a rate that can change), and often includes a debit card with ATM access and check writing privileges. Some banks limit certain monthly withdrawals and transactions from an MMA. You are also able to add money to an MMA whenever you want.

    CDs and MMAs both have advantages and disadvantages. Review the chart below to determine which option best fits your saving goals.

    	CDs	MMAs
    FDIC insured*	Yes	Yes
    Fixed interest rate	Yes	No
    Early withdrawal penalty	Yes	No
    Debit card and check access	No	Varies by institution
    Minimum deposit	Yes	Varies by institution
    Additional deposits allowed	Generally, no	Yes

    I Understand the Basics—Now What?

    When choosing how to save, it’s important to ask yourself several questions.

    • How likely are you to spend money if it’s easy to access? If you might spend money on impulse, putting it in a CD could help. Since you’ll get a penalty if you take money out early, it might make you stop and think before spending.
    • When will you need your money? Think carefully before locking your money in a CD for a long time to get a higher rate. If you’re saving for something big, like a house or college, be sure you have a plan for emergencies when you need cash. You might want to put some money in a CD and keep some in an MMA for quick access.

    Ready, Set, Save!

    You’ve considered the pros and cons, now it’s time to start saving. Visit our website to learn more about CDs and money market accounts offered by Lake City Bank. Drop in to a Lake City Bank branch location or call our One Call Center at (888) 522-2265 for more information about available rates and terms or to open an account.

     

    * Deposits are insured up to $250,000 per depositor, per FDIC-insured bank, per ownership category.