Dear Dr. Don,
My husband just received a bonus and, after paying off our credit cards, we have $20,000 left over. We are saving up for the down payment on a house, so we would like to get the best interest rate possible. We have at least 18 months before we will be able to purchase a home.

Should we stick with a high-yield savings account? Should we look into CDs or a money market account? We are also hoping to save an extra $1,500 a month for the next eight months. We would really like to make the most out of this windfall, so any information you could give us would be greatly appreciated.

Sara Savings

Dear Sara,
I don’t want to discourage you from shopping for the best rate on your savings, but sticking to your savings goal is more important as you build a down payment.

The big three concerns with short-term investments are liquidity, safety of principal and convenience. Doing handsprings to pick up a quarter percent in interest gets you an extra $50 a year on a $20,000 deposit.

The primary difference between money market accounts and high-yield savings accounts is that the former grants you check-writing privileges. If you’re saving for a down payment, that feature may not be all that important.

If the Federal Reserve continues to cut the federal funds rate in the near term, there will be continued downward pressure on short-term savings rates. One advantage of a certificate of deposit over a money market account or high-yield savings rate is that you know the interest rate over the term of the CD. For high-yield savings and money market accounts, you need to ask the bank representative about how the interest rate can change over time.

You can shop all of these investments on Bankrate using the CD and investment rate search page.

To ask a question of Dr. Don, go to the “Ask the Experts” page, and select one of these topics: “financing a home,” “saving & investing” or “money.”