Savings accounts, money market accounts and CDs: What are they and which is right for you?

Savings accounts, money market accounts and certificates of deposit (CDs) are three popular savings options. Each type of account earns interest which can help you achieve your financial goals. Plus, each depositor is insured to at least $250,000 by the FDIC, making these accounts a safe place to grow your balance. Here’s what else you should know about these savings options.

Here’s an overview to help you decide which savings type is best for you.

Before opening an account, answer three simple questions to reveal the best option for your situation.

1. What are my short-term and long-term savings goals?

Short-term goals are focused on upcoming expenses, typically ones that will occur within three years. Examples include holidays, vacations and new electronic devices. Long-term goals are focused on future expenses that require larger sums of money and consistent deposits for an extended period of time. Examples include college tuition and buying a home.

2. How much do I have available to deposit when opening a new account?

If you have a small amount, you might choose a different savings option than if you have a lot of money. Some accounts require a larger opening deposit, but pay higher interest rates.

3. How soon will I need the money?

If you need to use your money soon, you’ll want to keep it in an account that allows you to access it without incurring fees. But if you won’t need the money for a long time, you might choose a different option that can help your money grow faster despite being harder to access quickly.

With your answers in hand, use this guide to help you make a decision.

A traditional savings account may be a good choice if:

You’re just starting your savings journey and need the flexibility to withdraw funds without paying fees. While the account doesn't earn as much interest as other options, it could be just what you need to achieve a short-term savings goal.

A money market account may be a good choice if:

You have enough money to meet minimum deposit requirements and you’re saving for either a short-term or long-term goal. Or, if you have a traditional savings account that’s accumulated a large amount of money, consider moving some or all of the funds to a money market account with a higher interest rate so your savings can grow even faster.

A CD may be a good choice if:

You have a lump sum of money that you know you won’t need for a while. For example, if you have funds saved for a down payment on a home that you don’t plan to buy for another year, a CD is often more beneficial. It lets you earn more interest on the balance compared to a traditional savings account or regular money market account.

No matter which option you choose, maximize your savings by understanding account features that make saving money a breeze. Choose an account with features that best fit your needs:

• Earn financial rewards for making recurring deposits.
• Direct deposit a portion of your paycheck or government benefits check.
• Save on fees by choosing electronic instead of printed account statements.
• Set up automatic transfers from your checking account to your savings account.

To learn more about how you can take advantage of these unique features and more with a Commerce Bank savings account, money market account, or CD, visit your nearest branch or contact us today.