When choosing a savings account, it's important to understand all your options. Money market accounts and certificates of deposit are great savings tools, but which is better?

Long gone are the days when saving money meant handing the bank teller your passbook and having her stamp in your new balance. But choosing the right savings account still matters-whether you're accumulating funds for retirement or for a child's college education. There are many options, including certificates of deposit (CDs) and money market accounts (MMAs), which offer a higher interest rate than a traditional savings account.

Benefits of MMAs

If you need easy access to your funds, a money market account is probably your best choice. When shopping for a money market account, take note of the following items:

1. Service charges. Many MMAs have a service fee. They can vary significantly from bank to bank, so compare them before opening an account.

2. Minimum balance requirements. Money market accounts often have a minimum daily balance requirement. If you drop below it, you may be charged a fee.

3. Fees for excess withdrawals. Money markets are subject to Regulation D. This federal requirement allows only six withdrawals per month. Many institutions enforce this by charging a fee for each time you take money out of the account in excess of six. If you don't keep an eye on this, the charges can cut into your savings.

Benefits of CDs

If you don't need immediate access to your funds, a certificate of deposit is a good choice. With a CD, you can expect to earn more interest than with a money market account. You also have the flexibility of selecting a term that fits your savings needs. Invest for as little as one month, or as long as 120. Here are some guidelines when shopping for a CD:

1. Pay attention to early withdrawal penalties. Even if you have no plans to withdraw funds early, it's important to know about penalties for doing so. Some financial institutions charge more than others.

2. Relationship discounts. Many financial institutions will give you a premium CD rate if you engage in other business with them.

3. Automatic rollover. Some CDs have an automatic rollover policy. If you don't request action at the maturity date of your CD, you may be locked into an interest rate that you may not want. Keep track of maturity dates so that you can get the best CD rates available at the time.

Money market accounts and CDs are both great savings tools. The easiest way to choose between them is to decide if your funds need to be liquid. If you don't need easy access to the money, you'll earn more interest with a CD. The key to successful saving is to know-and to choose-the right account for your needs.