Smart saving with a money market vs. CD

When we think about passive income, our minds often wander to dreams of rental properties or conquering the stock market. But let’s be honest — both require a fair amount of money, time, and effort (yes, even renting out part of your house has its hurdles). What if we told you there’s a less stressful way to make your money work for you — no late-night plumbing calls or stock-trading spreadsheets involved? Enter the low-risk world of FDIC-insured savings options. 

Let’s dive into two great ways to grow your money while you sip your coffee, and we’ll break down the difference between a money market account and a CD while we’re at it.

Money market accounts

These hybrid accounts are basically your trusty old savings account on a serious caffeine boost. With competitive interest rates that can outpace the national average, these accounts let your money grow faster — all while keeping your funds easily accessible when you need them.

Here’s why they’re a win:

• Safe and secure: Your funds are federally insured, so your money is safe (up to $250,000 per depositor, per insured bank, per account ownership category).
• Easy access: Enjoy the flexibility of accessing your funds through checks, debit cards, account transfers, or Zelle®. It’s a smart choice for those who want to grow their savings without sacrificing accessibility. Just keep in mind that most banks, including UBT, limit the number of monthly withdrawals.
• Convenient deposits: Add funds with ease — whether by direct deposit, mobile check deposit, or in-branch services.
• Earnings on autopilot: Your interest earns its own interest, which compounds over time, adding up to a nice little nest egg.

For example: If you start with $10,000 in an account earning a 4.75% annual percentage yield (APY), your money could grow by just over $485 in a year, with monthly compounding. It’s effortless cash that adds up over time. And yes, interest rates do fluctuate — so it’s wise to shop around.

Certificates of deposit 

Think of CDs as the single-minded sibling of your money market account — they work just as hard, but are a little less flexible. These accounts let you lock in a fixed interest rate for a specific term — like six months, a year, or even five years. Because CDs are set for a fixed amount of time, you can’t add or withdraw funds until they reach maturity. However, they’re a fantastic way to earmark specific funds, and you can often open one with as little as $1,000 — perfect for funds you don’t need right away but want to see grow steadily.

Here’s why CDs shine: 

• Higher rates, bigger returns: Typically, CDs offer better rates than standard savings accounts — many rates are often comparable with a money market account.
• Inflation defense: CDs let you secure today’s rates, even if they drop later.
• Solid as a bank vault: CDs are FDIC insured, keeping your funds protected up to $250,000 per depositor, per insured bank, per account ownership category.
• Predictable growth: Lock in a rate now and enjoy peace of mind knowing exactly how much you’ll earn by the end of the term.

For example: Say you deposit $5,000 into a 24-month CD with a competitive rate of 3.75% APY. By the end of the term, you’d earn a guaranteed return of $387.54. Predictable, stress-free growth — what’s not to love?

Looking for a bit more wiggle room? Try an Access CD, which offers the competitive rates of a CD with fewer restrictions on withdrawals. It’s a flexible option for those who might need occasional access to their funds (minimum deposit applies).

For even smarter saving, consider CD laddering. By opening CDs with staggered maturity dates, you’ll enjoy steady access to your funds while earning higher long-term rates on portions of your savings.

Getting started

Building passive income doesn’t have to involve risk-taking or late-night number-crunching. Money market accounts and CDs are both straightforward, low-risk ways to put your savings to work. Money market accounts offer guaranteed growth while providing flexibility and accessibility, although there are limits on monthly transactions. CDs also offer higher interest rates in exchange for locking in your funds for a wide range of terms and have attractive minimum deposits. (For a blend of security and accessibility, an Access CD is a unique option.) Whichever option suits you, they’re not just great for meeting financial goals — they’re also perfect for peace of mind.

Smart saving starts with smart choices. Take advantage of these low-risk opportunities and make your money work harder, so you can sit back and enjoy the rewards.

Right now is a great time to get started with a money market from UBT. When you open a new Value Edge Money Market account with at least $10,000 in new money, you can earn up to 3.80% APY* on balances of $10,000 and up (0.85% APY* on balances under $10,000). It’s a great way to start your smart saving goals with a little extra oomph. Check it out!