$1000 to invest for 12 months. CD or Money Market? Where?

Question

$1000 to invest for 12 months. CD or Money Market? Where?

Answer 1

I would suggest an ingdirect savings account or even a paypal money market account.   You can get a 3.5% interest rate right now, and its very liquid.

If you use paypal, you can get a debit card which pays 1% cash back on money you spend with it.

Answer 2

Ben is right.  CD's are from the old days and really isn't needed anymore.  The reason is because you can find FDIC insured companies that have completely free savings accounts that pay as well as traditional CDs.  With a CD though, you usually can't add money or take it out before the term is done.

I have been banking online since 2001 and it is great.  

Check out ING Direct.  They have free savings accounts with 3.00% interest rates.  They even have checking accounts with free bill pay, no fees, free ATM withdrawals, and it pays a little bit on interest.