Actually, money market accounts and CD accounts often play rather different roles. Most commonly, money market accounts, or money market funds fill the need for temporary investment. This allows active investors, the ability to utilize the money market accounts as short-term investment tools. Investors and traders alike, that buy and sell securities, often need a location for assets, when they are not utilized. This is very important, as traders are able to keep their money working for them, albeit at rather low interest rates. The CD type investment is more commonly connected with the conservative investor seeking safety. Certificates of deposit are insured by the FDIC, up to a limit of $100,000 per account. The downside to bank investing is that CDs often require that you lock up your money for a period of time, most commonly one to two years. This makes them less likely than their money market counterparts. As a trade-off, CDs, usually pay a higher yield, but that’s not always the case.

The money market fund, as the name implies has the advantages of a mutual fund, in that it typically invests in several different banks, such as CDs, debt or bond obligations, or U.S. Treasury securities. This can result in a little bit higher return, when compared to its typical certificate of deposit, but does not offer the security that comes from FDIC protection. It’s important to note that money market accounts are often categorized as conservative investments, but they don’t share any government protection. Also, the big complaint associated with the bank investments is that much of the low return is lost to taxation and inflation. There are money market funds that offer tax-free returns. These tax-free advantages to money market funds are invested in municipal type bonds, which offer federal and tax-free advantages. They do not, however, typically pay is high as their taxable counterparts.

Traditionally, if you wanted to start a CD, you would go down to your local bank branch and set up a certificate of deposit. Since your local branch didn’t have much competition, you wouldn’t always get the best CD rates. The Internet has changed all of that. By doing a simple search online, you can find the high certificate of deposit rates, as well as attractive money market account rates. Sites like bankrate.com compare hundreds of the best CD rates throughout the nation, allowing you to find a much more attractive rate than you would have, even 10 years ago. In fact, there are many websites, just like Bank Rate that offer similar services, with the goal of finding you the best CD rates. It pays to check out a few of these services before finding an account to go with, as it is not at all uncommon to find better rates elsewhere. The important thing is to utilize the tools that are now available to us. In addition to finding the top account rate, FDIC protection is also important. Also, it’s always a good idea to go with a respected institution, as they are less likely to play games when it comes to withdrawing your funds.

If you’re looking for the best CD rates you can visit the site for a list of resources. For more on how money market funds work you can get more details on that as well. http://www.themoneyalert.com/savingsrates.html

Some reasons why credit unions are better

One of the biggest reasons why some people prefer investing in CD’s through a credit union is that usually, credit unions offer higher interest rates on the CD’s they offer as compared to the CD’s provided by banks. In most cases, the interest rates that credit unions offer is at least half a percent higher than the interest rates that banks provide. The reason why credit unions can provide higher interest rates is that because credit unions are cooperative institutions, which means that earnings are returned to members in the form of higher savings rates. In addition to this, given that credit unions are non-profit institutions, they do not have to worry about returning profits to external shareholders unlike banks who have to return profits to their shareholders, which means running and maintaining a credit union is cheaper.

Another reason why some people prefer credit unions is because they offer more affordable CD products because the minimum amount that they require are sometimes lower than what banks require from investors. In addition to this, credit unions also offer CD products that have very short maturity periods that still provide decent returns.

Traditionally, people who want to invest in CD’s opt to go to banks because of the perception that banks are more stable institutions. However, people are now slowly realizing that credit unions can provide them with a better deal with CD products. This is because apart from the fact that credit unions provide higher interest rates, the fact that maintaining a credit union is cheaper, they can also provide the stability that banks offer.

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