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If the Federal funds rate increases, will money market apys also increase? If they increase, would it be better to go with money market than a CD?

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  • Money market rates will track Fed rates. As one goes up, so does the other. We're in a slow increasing rate environment. The best I have seen lately is 2% for a one year CD and 1.75% for a money market. You have to ask yourself, is it worth tying up your money for one year for 25 basis points?
    – Bob Baerker
    Mar 14, 2018 at 3:09

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If the Federal funds rate increases, will money market apys also increase?

Probably. Money market account rates are generally based off of short-term rates that fluctuate over time. They might not instantly increase, but they should follow short-term rates over longer periods.

If they increase, would it be better to go with money market than a CD?

Not necessarily. CD rates will reflect anticipated rates over the life of the CD, while money market rates will be very short term rates that fluctuate over time. If the rates of the CD already anticipate an increase, then the higher rate of the CD might yield you the same as a lower money market rate now plus higher rates in the future.

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