Should I get a CD or money market acct.?

Question

I'm planning to invest $10,000 in either a CD or money market account. Which has better interest rates for, say, a 6-month period of time? I know you can't touch the CD for whatever length of time you choose, but they have a fixed interest rate. Is the money market acct. a fixed rate too? Also, will having either of them build my credit?

For those of you with experience in both, which do you prefer?

Answer 1

Both of these products are a waste. Go for a money market account if you only 6 months. If you can give at least 5 years then Id go that route with a long term mutal fund with a history of 25-30 years.  You can get 12% out of Long term mutals.

As far as credit? No. Credit is your history of paying back debt to banks. Having money does not show your lenders your ability to pay back money. I know of rich people with 0 credit ratings.  

Answer 2

If you will not need the money for a certain amount of time, I would suggest having a CD because they tend to have higher interest rates unless there is a bank running a special.  And money market rates are usually  based on a tier, the more money you have in there, the higher the rate, up to a certain point.  

Call all the local banks in your area and ask what their rates are.  Also, if you open a CD and an emergency arises and you need the money, you can always close out the CD, but there will be a penalty fee.

Neither will help your credit rating unfortunately.  

Answer 3

Neither. Both vehicles are losing efforts. Considering the fact that the interest rate of return you will receive is less than the current inflation rate, you will be losing money in either of those two choices. You will also not benefit your credit score as others have mentioned.

May I suggest you place the $10k into a tax deferred or tax free vehicle such as IRA or Roth IRA accounts. You have the option to self-direct the IRA and invest in both traditional (stocks, bonds, mutual funds) and non-traditional investment vehicles (real estate, business opportunities, loans secured by real estate). This gives you more options and much higher returns.