Money market accounts allow you to save funds on a more long-term basis and in return often offer a slightly higher interest rate return. Just about every financial institution will offer a money market savings account that you can use in addition to a traditional savings account. Here are some important things you should know about a money market account:
- The minimum balance requirements can vary greatly from one financial institution to another. In addition, the interest rate paid on the account may vary based on the minimum balance kept in the account as well.
- The number of transactions that can be made to and from a money market account may be limited each month.
- The advantage of a money market account is that they do offer easy access to your funds when you need them. Some money market accounts even have checks attached so that you can simply write a check for necessary funds.
When choosing a money market account, not only should you research various financial institutions and their rates and requirements you should consider also:
- How do you hope to use the money market account? If you are in need of access to your funds without paying penalties a money market is a good option. If you are trying to make yourself save consistently, you might want to consider an account that charges withdrawal penalties that encourage you to take time to consider anything that would have you using those funds.
- What is the minimum balance you are required to have in the account? While you might have a larger amount to deposit when opening your money market account, it is still wise to make sure that the minimum balance is one that you feel comfortable with. Ask the financial institution if there are any fees associated with falling below that level as well.
- Find out what other perks are offered in association with the account. Some banks will offer you incentives such as higher interest rates as you reach specific balances in your account. You can also find out if the financial institution you work with offers or encourages monthly savings increases through deposits from your checking or other accounts. This monthly encouragement could help you grow your money market savings over time.
The most important thing to consider when choosing any type of savings account is to ensure that it is an account option that will work for you. Money Market Savings accounts offer a great opportunity to earn a slightly higher interest rate without tying up your funds long term. A money market account allows you to get used to the idea of saving more substantial amounts of money long term before making more permanent investment commitments.