Author Topic: How should I choose between CDs and Money Market Certificates?  (Read 1946 times)

greenjb

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How should I choose between CDs and Money Market Certificates?
« on: December 18, 2016, 12:01:24 PM »
I'm looking for a place to park a decent sum of money ($25K+) for 1 year -- I'm trying to decide between a Synchrony CD (1.25% APY) and a PenFed money market certificate (1.36% APY). I'm not familiar with money market "certificates" but it looks like they operate the same way as a CD (https://www.penfed.org/Certificates_Overview/#tabs-2) -- you get penalized for early withdrawal. All else being equal, I'd choose the option with the higher interest rate. Does anyone have thoughts on which is the better option? Or if there's a better option I should consider? Thanks

Phenix

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Re: How should I choose between CDs and Money Market Certificates?
« Reply #1 on: December 19, 2016, 10:23:50 AM »
I'm looking for a place to park a decent sum of money ($25K+) for 1 year -- I'm trying to decide between a Synchrony CD (1.25% APY) and a PenFed money market certificate (1.36% APY). I'm not familiar with money market "certificates" but it looks like they operate the same way as a CD (https://www.penfed.org/Certificates_Overview/#tabs-2) -- you get penalized for early withdrawal. All else being equal, I'd choose the option with the higher interest rate. Does anyone have thoughts on which is the better option? Or if there's a better option I should consider? Thanks

It's only a $27.50 difference between the 2.  Pick whichever one is easier to open and call it a day.

greenjb

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Re: How should I choose between CDs and Money Market Certificates?
« Reply #2 on: December 19, 2016, 01:19:29 PM »
Ha, good point -- but I was curious about the difference, just as a matter of self-education.

Rubic

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Re: How should I choose between CDs and Money Market Certificates?
« Reply #3 on: December 19, 2016, 03:28:44 PM »
With a bit of extra work, you can park up to $15K at Lake Michigan Credit Union
for a 3% rate:  https://lmcu.org

Here are the criteria to qualify for the 3% rate in an LMCU Max Checking account:
  • Sign up for e-statements.
  • Minimum of 4 logins to online banking per month.
  • Minimum of 10 debit card purchases per month.
  • Direct deposit in your account at least once per month.
I have my LMCU account linked to Mint.com, which handles the minimal
required logins.

On the first Monday of each month, I reload my Amazon gift balance
with ten purchases of $0.50 each for a total of $5.00 to satisfy my debit
card requirement.

I also transfer $5 each month from my primary checking account into LMCU via
an automated ACH transfer which counts as a direct deposit.

The entire process takes less than 10 minutes each month after you've
got your account set up.  LMCU has a nice link on your account page to
confirm you've met all the requirements to qualify for the 3% rate.

oldladystache

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Re: How should I choose between CDs and Money Market Certificates?
« Reply #4 on: December 19, 2016, 03:36:06 PM »
PenFed money market certificate is the same thing as a CD. I've had several of them and there's no difference that I could tell.

aspiringnomad

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Re: How should I choose between CDs and Money Market Certificates?
« Reply #5 on: December 21, 2016, 09:16:37 PM »
With a bit of extra work, you can park up to $15K at Lake Michigan Credit Union
for a 3% rate:  https://lmcu.org

Here are the criteria to qualify for the 3% rate in an LMCU Max Checking account:
  • Sign up for e-statements.
  • Minimum of 4 logins to online banking per month.
  • Minimum of 10 debit card purchases per month.
  • Direct deposit in your account at least once per month.
I have my LMCU account linked to Mint.com, which handles the minimal
required logins.

On the first Monday of each month, I reload my Amazon gift balance
with ten purchases of $0.50 each for a total of $5.00 to satisfy my debit
card requirement.

I also transfer $5 each month from my primary checking account into LMCU via
an automated ACH transfer which counts as a direct deposit.

The entire process takes less than 10 minutes each month after you've
got your account set up.  LMCU has a nice link on your account page to
confirm you've met all the requirements to qualify for the 3% rate.

Wow, great little hack complete with step-by-step instructions. Thanks!