$10,000 long-term CD vs. $10,000 money market account: Here's which earns more now

Savers shouldn't deposit money into a CD or money market account before calculating their potential interest earnings. Getty Images

There have been a variety of attractive savings vehicles to explore in recent years. Whether you wanted to open a certificate of deposit (CD), a high-yield savings or money market account, all offered simple ways to both grow and protect your money. Each had high rates (exponentially higher than they were at the start of the decade) allowing savers to buffer the economic pain felt by inflation and higher borrowing costs elsewhere.

With the issuing of multiple rate cuts toward the end of 2024, however, and with the prospect of new rate reductions ahead this summer, savers may find themselves being a bit more strategic in their approach. And that's especially important when looking for a home for a large, five-figure sum of money like $10,000. 

For these savers, the interest-earning potential takes on added importance, knowing that today's rate will not remain this high for much longer. So it's important to do the calculations in advance, especially with a long-term CD, which will require savers to part with their money for an extended period or risk having to pay an early withdrawal penalty to regain access. Between a $10,000 long-term CD, then, and a $10,000 money market account, which will earn more interest if opened now? Below, we'll complete the calculations.

See how much more you could be earning on your money with a high-rate CD here now.

$10,000 long-term CD vs. $10,000 money market account: Here's which earns more now

CD interest rates are fixed and will remain the same until the account matures, despite any rate changes during the term. Money market account rates, meanwhile, are variable and almost guaranteed to change, especially over extended periods. Here, then, is what a $10,000 deposit into each account type will earn over time, assuming no CD early withdrawal penalties and a constant money market account rate:

• $10,000 18-month CD at 4.26%: $645.76
• $10,000 money market account at 4.32% after 18 months: $654.95
• Difference between the accounts: The money market account earns $9.19 more

• $10,000 2-year CD at 4.20%: $857.64
• $10,000 money market account at 4.32% after 2 years: $882.86
• Difference between the accounts: The money market account earns $25.22 more

• $10,000 3-year CD at 4.25%: $1,329.96
• $10,000 money market account at 4.32% after 3 years: $1,352.79
• Difference between the accounts: The money market account earns $22.83 more

• $10,000 5-year CD at 4.20%: $2,283.97
• $10,000 money market account at 4.32% after 5 years: $2,354.86
• Difference between the accounts: The money market account earns $70.89 more

So, in all four examples above, the money market account earns more than the CD. And, as the CD terms are extended, the disparity between the two account earnings becomes more pronounced. But the above calculations have been done tied to a static money market account rate, which is an assumption savers should not make, especially over a multiple-year period in which rates will undoubtedly change, perhaps in unexpected ways. 

In other words, savers will need to ask themselves if the theoretical higher interest earnings with a money market account outweigh the fixed return they can secure with a long-term CD. For many, a CD will still be the better choice.

Learn more about your long-term CD account options here.

The bottom line

A $10,000 money market account will earn more than a $10,000 long-term CD, on the assumption that the former's rates remain the same. But with the chances of a Federal Reserve rate cut increasing for later this summer and the reality that interest rates are highly unlikely to remain static over an extended period of multiple years, savers who want to earn a high return on their money and want to be able to rely on that return may be better served by depositing their funds into a long-term CD instead.