CDs, High-Yield Savings and Money Market Accounts Compared for a $2,500 Deposit

Savers should always look for the best ways to grow and protect their money, whether interest rates are high or low. The same holds for smaller sums. A certificate of deposit, high-yield savings account or money market account can all serve as useful homes for a five- or six-figure balance, but they also work for smaller amounts.

If you have $7,500 or even $2,500 to deposit, all three accounts will pay far more interest than a traditional savings account. The accounts differ in how they pay interest, so the returns vary. To compare the options, it helps to know how much each account would earn on a $2,500 deposit.

High-yield savings and money market accounts carry variable rates that can change. CD rates can match the top rates on the other two accounts, but they stay fixed until maturity. That makes future earnings on a CD easier to calculate.

Here is how much a $2,500 deposit would earn over the next year in each account, assuming rates stay the same and no fees or penalties apply.

A six-month CD at 4.10 percent would pay $50.74. A high-yield savings account at 4.03 percent would pay $49.88 after six months. A money market account at 3.90 percent would pay $48.28 after six months. The CD earns the most.

A nine-month CD at 4.00 percent would pay $74.63. A high-yield savings account at 4.03 percent would pay $75.19 after nine months. A money market account at 3.90 percent would pay $72.77 after nine months. The high-yield savings account earns the most.

A one-year CD at 4.10 percent would pay $102.50. A high-yield savings account at 4.03 percent would pay $100.75 after one year. A money market account at 3.90 percent would pay $97.50 after one year. The CD earns the most.

The CD comes out ahead in two of the three periods and locks in the rate. Savers who need access to their money may prefer the flexibility of a high-yield savings or money market account. Money market accounts also allow check writing.

Over the next six months, a $2,500 CD pays more interest than a high-yield savings or money market account. The high-yield savings account edges ahead over nine months, but the CD leads again after a full year. The interest rates on all three accounts are close, so savers should focus on whether they want a fixed or variable rate before choosing where to put their money.