Money Market Accounts and You

Money Market Accounts and You

Money market accounts can be an appealing way to do your banking, especially if you want to earn more interest on more than just your savings account. Additionally, this type of account offers other features, such as easy access to your money (most offer an ATM card) and the ability to write checks – they combine all the features of both a checking and savings accounts.

However, before you decide to do away with your savings and checking accounts, you should know that money market accounts typically require you to maintain a larger balance, plus the number of checks you are allowed to write during a given time period is limited. Here are a few things to consider before putting your money into a money market account.

Why Open a Money Market Account

It’s worth opening up a money market account if you’re looking for a secure place to deposit large sums of money while also earning interest. Conversely, a regular savings account may be better for a person with less money to save or a person who needs to keep a checking account for other purposes. Here’s are a few other reasons why you may want to open a money market account.

  1. You want to easily access your funds
  2. Your bank’s money market account offers a high-interest rate
  3. You want to write up to six checks per month
  4. You also want a debit card (which you can use six times per month)

Pros of Money Market Accounts

Money market accounts generally pay a higher interest rate than regular banking accounts. This means that the more you deposit, the more interest your account will generate on a month-to-month basis. These accounts are just as easy to keep track of as a regular checking or savings account, with most bank’s having their customer’s account access online. In addition, these money market accounts qualify for protection by the Federal Deposit Insurance Corporation (FDIC). Keep in mind that the current maximum covered per account is $250,000. Money market accounts are also insured by the National Credit Union Administration at credit unions. However, there are some qualification conditions, so be sure and check with your banking or credit institution to make sure your account is covered.

Cons of Money Market Accounts

There is usually a higher minimum deposit on a money market account than a standard banking account. This is because of the higher interest rate that is paid out. This balance must be maintained each month in order for the account to qualify for the interest rate. Some banks may even impose a penalty if your balance falls below the minimum at the end of the monthly balance sheet. As a general rule, money market accounts are intended as a method of longer-term savings. Because of this, there is usually a limit to the number of withdrawals you can make from the account each month or quarter. This is a very important factor in determining if a money market account is right for you, so be sure and ask about this aspect in particular. Additional fees are associated with going beyond the limited number of withdrawals as well.

Conclusion

The bottom line is that your particular circumstances will determine whether you could benefit by opening a money market account Although they do have their limitations if opening an account works with your financial goals, then it can be a great way to save and grow your money.

Before you make that decision, you owe it to yourself to do some additional research in order to find out if a savings account or a money market account is the best option for you.