Finance Tip: The Difference Between Money Market and CDs

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For more than 150 years, Kennebec Savings Bank has offered finance tips to individuals, nonprofit organizations, and municipalities to educate them on current trends when it comes to financing. 

Our goal is to provide valuable advice on setting and achieving financial goals, protecting your financial security, and expanding your financial education.

Whether you are just starting your journey towards financial independence or looking to improve your current financial situation, our tips and resources are here to help you navigate the complex world of finance. 

The Difference Between a Money Market Account and a CD

As a financial institution, we often get asked the question, "What is the difference between a Money Market Account and a Certificate of Deposit?" Both are popular options for individuals looking to save and grow their money, but they have distinct features that set them apart. 

Let us start with a Money Market Account. A Money Market Account is a type of savings account that typically offers higher interest rates than a traditional savings account. These accounts often require a higher minimum balance to open and maintain, but in return, customers can benefit from better interest rates. 

One of the key features of a Money Market Account is that it allows you to withdraw funds without penalties, making it a great option for individuals who want both liquidity and higher interest rates on their savings. Money Market Accounts also provide easy access to your funds through debit cards and ATM withdrawals. 

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On the other hand, a Certificate of Deposit, or CD, is a time deposit account that locks in your money for a specific period, ranging from a few months to several years. CDs typically offer higher interest rates than savings accounts and Money Market Accounts, but the tradeoff is that you cannot access your funds until the CD reaches maturity without facing penalties. 

CDs are a great option for individuals who have a specific financial goal in mind and do not need immediate access to their funds. By locking in your money for a set period, you can earn higher interest rates and watch your savings grow over time. 

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So, which option is right for you? The answer depends on your financial goals and needs. If you value liquidity and the ability to access your funds easily, a Money Market Account may be the best choice for you. However, if you want to earn higher interest rates and can afford to lock in your money for a set period, a CD may be a better fit. 

At Kennebec Savings Bank, we offer both Money Market Accounts and CD to help our customers achieve their financial goals. Our team of experts can help you determine which account is best suited for your needs and guide you through the process of opening and managing your account. 

Whether you are saving for a major purchase, building an emergency fund, or planning for retirement, we are here to help you make the most of your money. By working with Kennebec Savings Bank, you can benefit from competitive interest rates, personalized service, and a range of account options to suit your individual needs. 

At Kennebec Savings Bank, we are committed to helping our customers achieve their financial goals and build a secure future. Contact us today to learn more about our savings account options and start maximizing your savings potential. 

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Written By: Andrew Silsby, President & CEO | May 1st, 2024