The Federal Reserve maintained its benchmark rate between 3.5% and 3.75% at the latest meeting in July 2026. This marks the fifth consecutive pause in rate adjustments. Despite this, three Fed officials recently voted to increase rates, leading to speculation among analysts about possible rate hikes in future meetings. According to the CME Group’s FedWatch Tool, the probability of a rate hike in the upcoming Fed meeting is nearly 70%.
Derik Farrar, senior vice president at U.S. Bank, mentions that the market anticipated rate cuts at the start of 2026. However, the rates have remained unchanged, with potential for an increase. If rates rise, yields on deposit accounts might also go up, creating an opportunity for savers. While traditional savings accounts offer low returns, many certificates of deposit (CDs) and money market accounts currently provide rates around 4%, slightly above the 3.5% inflation rate. If you’re looking to earn interest on your savings, understanding how CDs and money market accounts compare is crucial.
Is a CD or a Money Market Account Better Now? Insights from Experts
Banking and financial experts provided their opinions on whether a CD or money market account suits savers better under current conditions.
Why CDs Could Be the Better Option
Experts suggest that CDs might be a strong choice due to their guaranteed rates. The rate you lock in when opening a CD remains constant until maturity. Jeff Judge, a managing partner at Chesapeake Financial Planners, points out that while rates may rise, predicting the future is uncertain. Recent developments, such as Kevin Warsh’s appointment as Fed chair and his decision to maintain steady rates, contrast with expectations of rate cuts.
“Right now I’d point most savers toward a CD, not a money market account.” — Jeff Judge
Locking in a CD rate protects against unfavorable movements in rates. Judge cautions against leaving large sums in low-yield checking accounts while waiting to see the Fed’s actions. CDs are beneficial for funds needed on a specific date, as you can select a term that aligns with your cash flow needs.
Why Money Market Accounts Might Be More Beneficial
Conversely, a money market account may be more suitable for those who want easier access to their savings and the potential to earn more if rates rise. These accounts offer flexibility with a variable rate that could increase if the Fed adjusts rates. Christopher Stroup, founder of Silicon Beach Financial, highlights the value of maintaining flexibility amid policy uncertainty.
“With policy uncertainty still high, preserving flexibility has real value.” — Christopher Stroup
Money market accounts allow you to benefit from rate increases without being tied to a fixed rate. Farrar suggests keeping funds in a high-yield savings or money market account unless there’s a purchase on a set date, allowing you to move money into a CD when you have clarity on your plans.
Considering High-Yield Savings Accounts
High-yield savings accounts are another viable option, offering variable rates around 4% and immediate access to funds without penalties. These can be part of a diversified savings strategy alongside CDs and money market accounts. Stroup advises using different accounts for varying savings goals, ensuring liquidity for emergencies and fixed returns for future obligations.
“Different savings goals deserve different accounts.” — Christopher Stroup
The broader choice depends on individual financial goals. CDs provide fixed returns amid rate uncertainty, while money market accounts offer access and potential rate benefits. High-yield savings accounts serve as a versatile option for accessible, competitive returns.