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Are CDs best for short-term saving?

By Sheyna Steiner · Bankrate.com
Thursday, November 14, 2013
Posted: 9 am ET

Finding a good place to park money for a short period of time is tough. There are simply no really good options. However, there are many mediocre options in terms of interest rates.

Bankrate.com tracks rates on certificates of deposit from around the country and calculates a national average rate. Some banks might offer higher CD rates than the average, and some might offer lower CD rates. The average rates for CD maturities under one year are now lower than Bankrate's national average money market account rates for several maturities.

Across Bankrate's CD and money market account rate tables, that relationship holds true as well. One thing to note: Only the six-month CD is searchable on the rate tables.

Here's what we have:

Bankrate.com national average as of 11/13/13

1-month CD APY 0.09 percent Money market account APY 0.12 percent
2-month CD APY 0.11 percent $10,000 money market account APY 0.15 percent
3-month CD APY 0.1 percent
6-month CD APY 0.14 percent

 

Bankrate.com site average as of 11/13/13

Money market account and savings APY 0.4 percent 6-month CD APY 0.4 percent
$10,000 money market and savings APY 0.39 percent

While there are entirely decent short-term CD rates out there, savers might be better served with a more liquid option such as a money market account. The rates are either equal to or better than a CD. Most offer check-writing privileges, and many have no minimum to open. Savers with $10,000 or $25,000 to deposit will find even better money market account rates.

What do you prefer for short-term savings?

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Follow me on Twitter: @SheynaSteiner.

***
Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.

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