If you are looking for a safe place to park your cash in between investments, two of your options are money market accounts and certificates of deposit (CDs). Both of these savings vehicles are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 (until December 31, 2009 when the limit is set to return to $100,000). As such, the safety of these investments is exactly the same. In both cases, your account is protected from losses in case of bank failure.

But where these cash investments differ is primarily in liquidity. Most CDs are designed to restrict access to the investment until the scheduled maturity date. CD terms can vary from one month to 120 months. If you need to take your money out before the CD matures, you will be subject to an early withdrawal penalty. Typically, this penalty is equal to three to six month’s worth of interest.

Conversely, money market accounts allow you to access your money at anytime. You are restricted to six transactions a month, however. For the added liquidity that comes with a money market account, you lose a certain amount of interest potential. According to the BankingMyWay.com survey, the current national average interest rate for a money market account is 0.497%. In comparison, the current national average interest rate for a 3-month CD is 0.695%. If you are willing to surrender access to your money for a year, the current national interest rate for a 12-month CD is 1.329%.

Deciding whether you should put your money in a money market account or in CD requires you to assess your need for liquidity. If you don’t plan to touch your money for a while, you might as well earn more interest by way of CD. If you’re just parking your cash temporarily and don’t want to commit to a longer-term investment, a money market might be the better choice.

Another factor you should consider is how interest rates will change in the future. The low rates for both money market accounts and CDs are owed to the current recession and credit crisis. The Federal Reserve lowered interest rates to try to get more money into the market. In addition, the Federal Reserve has been buying up securities to increase the money supply, also known as "printing money." Some fear that these practices will lead to inflation, ultimately causing interest rates rise in order to contract the money supply.

And if rates go up, you don’t want to have your money in CDs. If you do, your money will be locked into a low fixed rate investment and you won’t be able to take advantage of the rising rate environment. One way to protect against this is to choose Flex CDs. With Flex CDs, you can sometimes get a higher rate if interest rates rise. Alternatively, you can use a CD laddering strategy in which you stagger the maturity dates of your CDs to increase liquidity.

Whichever investment you choose, you can find rates and offers for both in your area at BankingMyWay.com.

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