A recent study by Market Rates Insight (San Anselmo, California) showed an increase in bank customers choosing money market accounts over CDs.
Here is a quick summary of the study for the second half of 2010:
- Deposits in money market accounts rose by 2.6% or $138 billion
- Time Deposits (CDs) dropped by a whopping 8.5% or $200 billion
- Savings Accounts increased by $76 billion
- Checking account deposits moved up by $43 billion
So why are people moving their savings from CDs to money market accounts?
Here are some possible reasons:
- Low confidence in an economic recovery
- Uncertainty about employment stability
- Online Money market accounts offer basically the same rate as a one year CD
- Money market accounts are liquid and charge no early withdrawal fee like CDs
- Money market accounts rise with interest rates while CD rates are fixed for a term
In conclusion, if you feel that interest rates are going up within a year, or you might need your money within a year, a money market account will be the best choice.
Compare today’s current money market accounts on our money market comparison chart.
You can also check today’s best cd rates.
