Time Deposits Vs. Money Market
Which is better? It Depends.
Building your savings is an important part of sound money management. As hard as you work to earn and save, you want to make certain your money is in the right type of account to meet your future needs. Putting your savings into a money market account or a time deposit account (also known as a certificate of deposit or CD) provides a safe way of earning interest and growing your balance over time.
Your funds in either account type have the benefit of being insured up to the maximum allowed by law by the Federal Deposit Insurance Corporation (FDIC) at Security First Bank.
Which option is better for you? Interest rates, access and flexibility are all factors that could impact your savings decision.
- Interest Rates – To compare interest rates, look at the annual percentage yield (APY), which takes compounding into account. The APY is a percentage rate reflecting the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a year. Typically, time deposit accounts, especially those held for longer terms, pay a higher rate of interest than money market accounts.
- Access – A money market account may be a good choice if you need access to your cash periodically, but on a less frequent basis than a standard checking account. You can make withdrawals by writing a check, withdrawing from an ATM or transferring money online, although there are limits to the number of transactions you can make each month.
Time deposit accounts mature after a specified term (from 3 to 60 months), which is when you receive the principal you deposited along with your accrued interest. If you withdraw funds or close the account prior to maturity, you’ll usually have to pay an early withdrawal penalty. Time deposits can be a good option if you are looking for a higher APY and you’re certain that you will not need your savings prior to the account’s maturity.
- Flexibility – Money market accounts at Security First Bank offer benefits like check writing, ATM access, online money transfers and online bill payment, plus a relatively low minimum deposit requirement of $100. Our traditional time deposit accounts have a minimum opening deposit of $1,000, and require your deposit to remain for the length of the term.
Whatever your savings goals, it is likely that Security First Bank has an account that will fit your needs. We are here to answer your questions, offer information and help to guide your decisions around sound money management.