What is a Money Market Account?
A money market account (MMA) is a type of deposit account that pays higher interest rates than a regular savings account, but allows you to access your money with limited restrictions. MMAs are typically offered by banks and credit unions, and the interest rate you earn is tied to the current market rate.
MMAs versus Savings Accounts
The biggest difference between an MMA and a savings account is access to your funds. With an MMA, you are allowed a limited number of withdrawals or transfers each month. If you exceed the specified number of transactions, you could be subject to fees, though there may be exceptions depending on the bank or credit union you use.
Savings accounts, on the other hand, have no restrictions on the number of transactions. With a savings account, you may be able to withdraw cash or transfer to another account as often as you like. However, savings accounts typically offer lower interest rates, often much lower than those offered with an MMA.
Benefits of a Money Market Account
The primary benefit of a money market account is the higher interest rate you’ll earn. These accounts make it possible to earn more money on your savings, while still enjoying easy access to funds when needed.
MMAs also offer a more secure alternative to traditional savings accounts. Money Market accounts are insured by the FDIC, so you can rest assured that your savings are protected if your bank should fail.
What to Consider When Choosing a Money Market Account
If you’re considering opening a money market account, there are a few things to consider. First, you’ll want to compare interest rates from different banks and credit unions to find the best account for your needs. Also, be sure to look at the fee structure for the account; some accounts will charge a monthly fee regardless of account activity. Finally, you’ll want to consider the minimum balance and other deposit requirements; some money market accounts require a minimum initial deposit while others require an ongoing average balance.
Money market accounts can be a great option if you’re looking to earn more interest on your savings. Be sure to carefully compare different accounts to find the right one for you.