By BankingMyWay.com Staff
Particularly in today’s economy, knowing which investments to make and which to hold off on can save you a ton of money. And just because you’re not a financial expert doesn’t mean that you have to go and stuff your money under your mattress. You can still make money with low-risk, short-term investments like CDs or money market accounts.

Whether you’re new to investing or simply are not sure where to put your money, choosing between Certificates of Deposit (CDs) and money market accounts can be challenging. Say you have $10,000 that you won’t need for at least a year. Which type of investment is better? Let’s look at the definitions of each product first.

Certificates of Deposit (CDs)

CDs are safe investments that have little to no risk and are locked in for a set amount of time (in this case, 12 months). There is usually a minimum deposit of $500 to $10,000 and account holders are typically subject to a penalty for early withdrawal. FDIC-insured CDs earn interest rates around 1.4% to 3.0% for 12 months (based on the national average as of April 2009). BankingMyWay.com has an updated comparison tool for CD rates by state that you can use to find the going rates in your area.

Money Market Accounts

Money market accounts are also short-term debt instruments that earn interest based on funds from commercial paper, repossessions, Treasury Bills and other securities with a maturity date of one year or less. They are FDIC-insured and currently average about 0.53%, according to BankingMyWay.com’s rate chart. As long as you meet the minimum base deposit amount at any given time, you are not normally penalized for a specified number of monthly withdrawals. Don’t confuse this with a money market "fund," though, which is not FDIC-insured.

So which is Best?

Now that you know the difference between a CD and a money market account, you can make a fair comparison. Traditionally CDs yield more than money market accounts over a 12-month period. However, they do come with steep penalties (the standard for a CD with a one-year term is 90 days interest) if you withdrawal your funds early. Money market accounts may yield a little less in interest, but you can take money out easier and on average, you can also beat the rates of a traditional savings account by about 150 to 300%.

Hot Tip: Shop Locally

Hometown banks, credit unions and brokers can often get you a better deal than some of the national and international conglomerates like ING Direct (Stock Quote: ING) and Fidelity (Stock Quote: FNF). As long as you check to make sure the financial institution is FDIC-insured, you may be able to score a very competitive rate at a regional or local bank. Online brokers are also highly popular and offer rates that challenge the national average.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.