Unique Elements from Money Market Accounts

Money market accounts are savings account offered by many financial institutions. Money market accounts are a type of hybrid account. They combine some of the elements of savings and checking accounts. Yet they also contain elements that are unique. These accounts differ from traditional savings accounts in that they usually pay a higher interest rate than the traditional savings account. Traditional savings accounts can be opened with a minimum deposit. Money market accounts typically will require substantially higher minimum deposits. Another drawback is that with money market accounts customers are usually limited to between three and six withdrawals per month. Money market accounts share common commonalities with traditional checking accounts. Although they are intended to be used for savings, account holders can often write up to three checks per month on their money market accounts. Noncompliance to these rules can result in penalties including lower interest rates for the account holder.

When money is deposited into a “money market deposit account” at a bank that participates in the Federal Deposit Insurance Corporation (FDIC), the funds are guaranteed to be safe. Even if the bank goes out of business, the money deposited is guaranteed to be there. When money market accounts are held by credit unions, it is important to make sure that the credit union is a member of the National Credit Union Association (NCUA). The NCUA is a federal agency which guarantees funds held at credit unions.

Money market funds differ from the deposit accounts in that the money market funds are not insured by the federal government. Federal law does require that the money market funds be invested into low-risk securities. The investments are generally made in certificates of deposit, government security and other securities that are considered low-risk.

These money market accounts typically provide a higher interest rate on deposits. For customers who can afford the larger minimum deposits and who do not require immediate access to their funds, money market accounts are very attractive. Just like most other savings programs, the interest rate of the money market accounts will vary from bank to bank. Usually, the greatest interest rates are paid to the accounts with the largest balance and to the accounts with longer terms.

It is no secret that no type of savings program has yielded spectacular results in recent years. However, when comparing money market accounts to checking accounts, savings accounts or certificates of deposits, the money market account is consistently the highest performer. For individuals who need a higher interest rate than a traditional passbook savings account, the money market account should be considered. Funds on deposit in money market accounts are typically more accessible than money invested in certificates of deposit. If liquidity is important, a money market account may be just what you need.

Interest rates can vary tremendously among various financial institutions. It requires some diligence to locate the bank which will provide the best opportunity for financial growth. Finding that bank has just been made much easier. We have the resources to provide customers with information on rates and regulations from a large number of banks. We have also included customer reviews that we are sure you will find helpful.

It is imperative that everyone save as much money as they can. Deciding on the best way to save often requires some professional guidance. Our website was designed to help individuals make the best financial decisions possible. It is your money. Use it, invest it, and save it wisely.