Which is safer, a money market or CD?

Question:

Bank of America offers a high yielding 10-month CD with 5% interest rate. I found a money market savings account through eloan that offers 5.5 % interest. Are both of these types of accounts safe or is one safer. Which is better for short term (1 to 2 years) investing?

Answer:
As far as safety goes, they should both be the same assuming that eloan has the same FDIC protection that BofA has. They main difference between the two accounts is that typically money market accounts have rates that can change at any time while CD rates are fixed for the term of the CD. These aren't investments where you run the risk of principle being lost like when you buy stock for example

CD, if u Really want to make money.Hedge Funds

They are incredibly safe.

You should realize that a CD is a money market instruments. When we say "money market" we include CDs, T-Bills, Commercial Paper (CP), Banker's Acceptances, etc.

To give you an idea how safe, there were 11 defaults out of 4364 CP issues rated by Moody during 972-2000. Every one of those defaults was because of a liquidity crisis -- and each one was eventually paid.

please don't call 5% "high-yielding" as losing $$ after taxes and inflation there. Both equally safe & equally bad.

Which is safer, a money market or CD?

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