A business money market account (MMA) and a business certificate of deposit (CD) are interest-bearing accounts that let you earn money on your business financial reserves. These accounts are considered low risk, along with business savings accounts, and earn less interest than investment accounts. However, both are Federal Deposit Insurance Corp. (FDIC)-insured for up to $250,000 per account holder.
One of the main differences between business CD vs MMA accounts is that CDs require storing money in an account for a fixed period. Withdrawing your money before the CD term expires can result in early withdrawal penalties. Meanwhile, MMAs allow you to deposit and withdraw money anytime, although many still restrict fee-free monthly transactions to up to six despite the Federal Reserve Board (FRB)’s lifting of that requirement.
If you would like to open a business MMA or CD, U.S. Bank is a great option. It offers a Platinum business MMA, which earns an annual percentage yield (APY) from 0.05% to 5.75% Opening a new U.S. Bank Platinum Business Money Market account until Dec. 5, 2023, entitles you to a 4.50% bonus interest rate if your account balance ranges from $25,000 to $2,999,999.99. Both bonus and standard rates may change at any time without prior notice and may vary depending on your location. , depending on your daily balance. Business CDs earn an APY from 0.5%% to 4.80% The rate is effective as of Oct. 10, 2023. It is subject to change at any time. Contact the bank for updated rates based on your area. , depending on the type of CD account you open and the term you choose.
Comparing Business Money Market Accounts, Business CDs & Business Savings Accounts
There are three types of business bank accounts that allow you to earn interest on reserve business funds. In addition to business MMAs and CDs, you could choose to open a high-yield business savings account. Check out our comparison of business MMA vs high-yield savings to see how they differ and learn which account fits you best.
The table below compares some of the differences among the three account types.
Businesses with large reserves they don’t need to access regularly
Businesses with very large reserves they won’t need to access for months or years
Businesses with smaller reserves they might need to access regularly
Interest Rate Offered
Similar to, but usually higher than, savings; lower than CD
Highest of the three
Similar to, but usually lower than, money market; lower than CD
Liquidity of Funds
Can withdraw funds anytime, subject to monthly transaction limits
Unable to withdraw money for a fixed period; early withdrawal penalties are very high
Can withdraw funds anytime, subject to monthly transaction limits
Check Writing Capabilities
Relative Minimum Deposit
Highest of the three
Similar to money market, but higher than savings
Often the lowest
Sample U.S. Bank Business Money Market vs CD Overview
U.S. Bank Platinum Business Money Market
U.S. Bank CD Special
Required Opening Deposit
Monthly Maintenance Fee
Required Minimum Balance
$50,000 to $249,999.99 daily balance
$1,000 to $250,000 under a 13-month term
One-time deposit for each term
Interest accrued daily and paid monthly
Guaranteed rate of return upon term maturity
Up to $250,000
Depending on your needs, you may opt for a business MMA over a CD or vice-versa. Both business accounts are covered by FDIC insurance up to $250,000. U.S. Bank’s Platinum Business Money Market account requires a minimum $100 opening deposit, whereas its CD Special account requires a higher deposit.
Under the Platinum Business Money Market account, you earn a solid 4.85% APY, which includes the 4.60% bonus APY rate—but this is a limited offer. When the offer expires, standard rates may apply. Further, you need to pay a monthly maintenance fee Maintain a $10,000 minimum daily ledger balance to waive the monthly maintenance fee. of $15 and maintain a daily balance of $50,000 to $249,999.99 to earn this rate.
In contrast, the Business CD Special account provides up to 4.80% APY for balances ranging from $1,000 to $250,000—as long as the deposit remains untouched for 13 months. Otherwise, any early withdrawals may result in paying a penalty.
When To Use a Business Money Market Account
When comparing a business money market vs CD accounts, choose the former when you:
- Need easy access to your money
- Plan to deposit and withdraw money from your account regularly
- Don’t mind earning lower interest returns in exchange for liquidity
- Often have large, unplanned expenses that might require using your reserve funds
Business Money Market Account Pros & Cons
|Strong interest returns on business reserves
|Limited interest earning or potential monthly fees from high minimum balance requirements for some accounts
|Low-risk investments, with FDIC-insured funds up to $250,000
|Potential fees or account reclassification penalties for exceeding six monthly transactions
|Relaxed or removal of monthly transaction limits by some banks
|Inflated introductory rates with some banks can lead to seeking a new account after the intro period ends and APY drops
When To Use a Business CD
When deciding between a business CD vs MMA accounts, go with the former when you
- Have financial reserves that you can leave untouched for several months or years
- Want to earn higher interest returns and are willing to sacrifice liquidity of reserve funds
- Are OK with potentially paying a penalty if you have to withdraw the money early
- Have other reserve funds in a savings or MMA account that can be used for unexpected expenses
Business CD Pros & Cons
|Higher interest rate earnings than regular savings and MMAs
|Tied-up business reserve funds for a set period
|Low-risk investment, with FDIC-insured funds up to $250,000
|Potential large early-withdrawal penalties for removing funds early
|Variety of term options allows flexibility and creation of CD ladders for more fund liquidity
|Earnings may not keep up with inflation, depending on the term length, leading to money loss
When To Consider An Alternative
There may be times when a regular business savings or a business checking account is a better option.
- If you have smaller reserve amounts, you might need more regular access to funds, so a traditional business savings account may be suitable. Though it will likely have the lowest interest earnings among the three types of savings accounts, it often allows you the most regular access to your money without penalty.
- Our recommendation is Live Oak Bank. It offers 4.0% Live Oak Bank's APY rate is valid as of 3/23/2023. The rate may change at any time without notice. APY for its business savings product with no required opening deposit and a negligible 1-cent minimum balance requirement. Our Live Oak Bank business savings review contains more information on the account.
- If you need constant access to your funds with unlimited transactions, the best choice may be an interest-earning business checking account. You won’t have to worry about paying any fees for excess transactions and can still earn interest on your business finances.
- We recommend Bluevine for those seeking an interest-earning business checking account. It is largely a fee-free account that earns 2.0% Bluevine's APY rate is valid as of 10/10/2023. The rate may change at any time without notice. APY on all qualifying balances up to $250,000. Read our Bluevine business checking review to learn about the account’s features.
Frequently Asked Questions (FAQs)
A business MMA is an interest-bearing business bank account that typically earns interest at a higher rate than business savings accounts. However, MMAs earn less interest than investment accounts because they are considered low risk.
They can be funded via automated clearing house (ACH) transfer, check or cash deposit, or incoming wire transfer. Once the money is in your account, you can leave it to draw interest, withdraw it, or transfer it to another account.
Both CDs and MMAs are great ways for your business to earn interest on its reserve funds. If you need regular access to your funds, a business MMA allows you that access. If you don’t need your reserves for a set period, then a business CD is the best option because it will earn you a higher interest rate than a business MMA.
Businesses use MMAs to earn interest on reserve funds that aren’t needed for a company’s day-to-day operation. While this type of account doesn’t earn as much interest as a business CD, it allows you consistent access to your funds while earning interest without early withdrawal penalties typical with CDs.
When comparing the benefits between a business money market vs CD account, both can help your business grow by earning interest on your company’s reserve finances. If you are looking to earn the maximum amount of interest and aren’t worried about reserve liquidity, a business CD is the best option. If you don’t mind earning less interest to have access to withdraw and deposit funds in your account regularly, a business MMA makes the most sense.