If you're sitting on extra cash and looking for a low-risk way to grow it, this may be a good time to do so. Interest rates are still elevated right now, after all, and that has led more savers to weigh the pros and cons of locking their money away in a certificate of deposit (CD) versus keeping it liquid in a money market account. Both options offer stability and better returns than a standard savings account, but the right choice for you depends on your timeline and flexibility.

Right now, money market accounts are offering surprisingly competitive rates, and in some cases, the rates tied to these accounts have surpassed the rates on long-term CDs. That's a shift from the past, when CD accounts generally came with higher yields than other options in exchange for locking up your funds. And, for savers trying to decide which route will help their $5,000 deposit work harder, the difference could be significant.

So, how do the numbers actually stack up when comparing long-term CDs and money market accounts? Let's break down what you could earn with a $5,000 investment in either a long-term CD or a money market account over a few different time frames.

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$5,000 long-term CD vs. $5,000 money market account: Here's what earns more interest now

The numbers tell a clear story, at least on paper. Here's how a $5,000 investment would perform across different timeframes, assuming the money market rate stays constant:

• 18-month CD vs. money market account
• 18-month CD at 4.26%: You'd earn $322.88 in interest, bringing your total to $5,322.88.
• Money market account at 4.32% after 18 months: You'd earn $327.47 in interest, for a total of $5,327.47.
  
• 2-year CD vs. money market account
• 2-year CD at 4.20%: You'd earn roughly $428.82, ending with $5,428.82.
• Money market account at 4.32% after 2 years: You'd earn $441.33, totaling $5,441.33.
  
• 3-year CD vs. money market account
• 3-year CD at 4.25%: You'd see $664.98 in interest, for a total of $5,664.98.
• Money market account at 4.32% after 3 years: You'd earn $676.40, ending with $5,676.40.
  
• 5-year CD vs. money market account
• 5-year CD at 4.20%: You'd earn $1,141.98, bringing your total to $6,141.98.
• Money market account at 4.32% after 5 years: You'd earn $1,177.43, totaling $6,177.43.

In every scenario outlined above, the money market account edges out the CD, though only slightly. But while at first glance the difference in earnings between a long-term CD and a money market account may seem small, it's worth understanding how these accounts work so you can make the right choice for your goals.

The key difference is that while the money market account slightly outperforms the CD in each scenario based on current rates, CD rates are fixed, meaning your earnings are locked in until the CD account matures. Money market accounts, on the other hand, have variable rates, meaning that if the rate environment cools over time, your returns could shrink. On the flip side, if rates climb higher, you could earn even more than projected with this type of account.

This distinction is crucial. CDs offer stability and predictability, while money market accounts provide flexibility but carry some rate uncertainty, so you'll need to weigh which factor you prioritize as part of your decision.

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How to decide which option is best for your money

While money market accounts are offering a small interest advantage right now, there's more to consider than just the numbers. Here's what to consider as you weigh your options:

• Liquidity vs. commitment: CDs lock your money away for a set term, and withdrawing early typically means paying a penalty. Money market accounts, by contrast, let you access your funds anytime without penalties. If flexibility matters, this could be a dealbreaker.
• The rate environment: Today's high rates make money market accounts attractive, but if rates fall in the coming months, you could see your earnings drop. CDs, on the other hand, lock in your rate for the full term, protecting you from a future rate dip.
• Your discipline: If you're tempted to dip into your savings, a CD's early withdrawal penalty could help keep you on track.

The bottom line

Both long-term CDs and money market accounts are safe ways to grow your savings, especially if you're wary of market volatility. Right now, though, money market accounts have a slight edge in earnings and they offer more flexibility. But if you value a guaranteed return and won't need to touch your funds, a long-term CD still deserves a look now, considering that if you make your move quickly, you could lock in a top rate on this type of account before rates fall.