Money Market Accounts: What You Need to Know
Money Market Accounts offer set interest rates on your savings in a bank or credit union. Meanwhile, a money market fund bundles relatively safe investments, such as government bonds and certificates of deposit, and is managed by a professional investor.
Money-market funds are often used to safeguard cash that could be needed on short notice, such as for a home down payment or an emergency fund, or to diversify a portfolio of stocks and bonds.
Money Market Accounts (MMAs) are savings accounts that have debiting and check-writing abilities accompanied by higher interest rates than traditional savings accounts. You can open a money market account as a safe way to grow your savings. Money Market Accounts offer some features of checking and savings accounts.
When you open a money market account, you are provided with a debit card and checks. You can use those to make purchases or pay bills. You can also withdraw cash from an ATM or transfer money to other accounts. With a money market account, you can make up to six withdrawals per month, without penalty.
A money market account is an FDIC or NCUA-insured deposit account. A money market mutual fund is an investment, offering both reward and risk. Money Market Accounts typically offer a mix of checking and savings features, with the appeal of earning interest paired with check-writing privileges.
Money Market Accounts operate like a hybrid of a checking and savings account: users earn interest on their balances, typically at a higher rate than with a traditional savings account. Unlike most checking accounts, Money Market Accounts generally have monthly maintenance fees and minimum balance requirements.
Money Market Accounts can be great for long-term savings goals. The interest earned on the balance can help your savings grow faster than with traditional savings accounts, and you’ll have access to the funds if needed. It’s important to compare different accounts to find the one with the highest interest rate and lowest fees.
It’s also important to note that Money Market Accounts are not insured against loss of principal. So it’s important to research the financial institution offering the account to make sure it is FDIC or NCUA-insured.
Money Market Accounts are a great way to save money while still having access to it if needed. They offer higher interest rates than traditional savings accounts, and you can use the funds in the account for purchases or bill payments. Before opening an account, be sure to compare different accounts to find the one with the highest interest rate and lowest fees. It’s also important to make sure the financial institution is FDIC or NCUA-insured.
