In the quest for higher yields, many consumers ignore lower-yielding -- but more secure -- options like certificates of deposits and money market accounts.

Both of these short-term investments can be useful tools for investors looking for a safe place to park their money, while still earning a little something from their cash. But there are differences between the two options, and it's important to understand what you are getting before you hand your money over to the bank.

In the spectrum of yields, CDs and MMAs are located somewhere between investing in the stock market (which is a pretty volatile place these days, and depositing it in a savings account (which is practically equivalent to stuffing it under your mattress, with the anemic interest rates currently offered on savings accounts).

If you have $5,000 to $10,000 that you want to keep close, CDs and MMAs offer a viable option. Both types of investment are insured by the Federal Deposit Insurance Corporation up to the $100,000 limit per depositor per insured institution. Unlike other investing options like mutual funds or equities, CDs and MMAs pretty much guarantee that you'll walk away with more than your initial investment.

The main difference between these two types of deposit accounts lies in the access they offer to your money. CDs are less accessible, or liquid, because they require you to give your money to the bank for a set period of time -- generally for intervals of six months, one year, two years and on, up to 10 years.

In exchange for not being able to touch your money before the maturation of your CD, the bank offers you a higher interest rate than it would for a MMA. And the longer the duration of your CD, the higher the interest rate the bank will offer.

Currently, the national average for interest rates on CDs hovers a little over 3% for six month CDs, and just over 4% for five year CDs. That's a significant difference from what's offered on MMAs, which currently sit at closer to 2.5%.

But with an MMA, you have easy access to your cash. The accounts require you to hold a minimum balance and to conduct a limited number of transactions per month.

You can deposit or withdraw money from an MMA much as you would a regular savings account -- meaning you don't face the steep penalties associated with accessing your CDs before maturity. (CD early-withdrawal penalties typically depend on the duration of the CD, but can leave you with less principal than you invested in the first place.)

Which one is right for you depends on how soon you need the money. If you aren't likely to need it for a few years, your best bet may be to invest in CDs. You can set up a CD ladder, which is a series of CDs with different maturities. As each CD comes due, you can either use the money or invest it in a new CD. This way you'll have a chance to access some of your money every six or 12 months, depending on the intervals you set up.

If you aren't sure when you will need the money, or if there's a good chance that you'll need it within the next year, you may want to choose the MMA. The lower interest rate may be tough to swallow when you look at how little you have to show for your investment after the first year, but if you do end up needing that money, you'll be happy not to have to pay the early withdrawal penalty on a CD.

To find out more about the interest rates on CDs and MMAs available from your local lenders, you can search by zip code on BankingMyWay.com.

Peter McDougall is a freelance writer who lives in Freeport, Maine, with his wife and their dog.

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