What Is A Money Market Account?

A money market account is every bit as safe as a regular savings or checking account, but pays a higher interest rate. If you have $1,000 or more sitting around in a savings account, the money is earning practically peanuts. It would do much better in a money market account!

If you have $1,000 or more sitting around in a savings account, that money is earning practically peanuts. It would be much better off in a money market account.

A money market account is every bit as safe as a regular savings or checking account, but pays a much higher interest rate. It's even better than a certificate of deposit because you can get to it in an emergency without a penalty. But there is a minimum balance requirement that can be anywhere from $1,000 to 2,500. And you're only allowed to write 3 checks a month from it, usually a designated minimum amount.

A money market account is a great deal because it disciplines one, having to keep a minimum amount, is liquid, and pays a higher interest rate. And money market accounts, like your regular savings, are insured by the Federal Deposit Insurance Corporation.



There usually are three kinds of money market accounts. There is the basic one with a designated minimum opening deposit and balance. The second is a tiered account, which usually requires larger minimums but pays a higher interest rate. And there is the package deal, where you have a savings account, a certificate of deposit as well as a money market account with the same bank. Because it is a package deal, the bank may waiver on the minimum deposit, and pay a higher interest rate as well.

So, ask your bank about the minimum requirement, what interest rate it pays, and find out if higher balances pay higher yields. And be sure to ask if the bank has a monthly maintenance fee on these accounts, and if they do, find a bank that does not.

A money market account is a great option to a regular savings account!

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