A money market account (MMA) is attractive as it offers a higher return while providing easy access to your money. While money market accounts come in the form of both a savings or a checking account, they all typically require a minimum balance to open them and falling below the minimum could lead to receiving a lower return, or no return at all.
MMAs are great for money you will or may need in the near future. You can keep earning a high return while saving for large, infrequent expenses such as emergency funds, tuition, or a wedding. Or, if you’re just looking for a way to boost your savings account by earning more, it could be the right account to start. Take a moment to understand the structure of an MMA and how it works to see if it’s the right fit for you.
Money Market Savings Account
A money market savings account functions like a traditional savings account with a few variations. Instead of locking up your money in a certificate for a set term, you can still access your funds while earning a higher rate. The interest on a money market savings account is typically compounded daily or monthly and paid out on a monthly or quarterly basis. Many financial institutions will allow you to write checks, withdraw cash, or use a debit card for your money market account if needed. However, as this is considered a savings account, you are limited to making up to six (6) transfers from the account each month.1
Money Market Checking Account
Comparatively, a money market checking account gives you a higher return without the transfer limitations of a savings account. You’re able to enjoy the return of a savings account with debit card access and check writing capabilities of a checking account. As a checking account, you can shop and make purchases as usual and still receive a higher return on your funds.
Should I open a money market account?
If you want a safe place to deposit a large sum of money where you can earn more interest than a savings account and still have access to money, a money market account is worth consideration.
A few reasons to open an MMA:
- You want to earn a higher return
- You want to be able to access funds when needed
- You need to transfer funds from the account periodically throughout the month
Do your research to find the best option for you. Keep in mind a money market account isn’t the same as a money market fund; MMAs are insured by the FDIC or NCUA and the safer option to maximize your savings. Take advantage of accounts offering tiered rates to receive higher dividends as your balance increases as well as financial institutions offering easy access to money via online banking.
Ultimately, you want to find the account that works well for you and takes you one step closer to reaching your financial goals.
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1During any calendar month you may not make more than six (6) withdrawals or transfers to your other Credit Union accounts or to a third party by means of Online Banking transfer or other pre-authorized electronic funds transfer, automatic transfer, overdraft protection transfer, telephone order or instruction, request transmitted via facsimile machine, or transfer initiated through our audio response service (Sourceline).