Money Market Accounts

Money Market Accounts  

Money market accounts (MMAs) combine the benefits of both savings and checking accounts. They typically pay a higher interest rate than savings accounts in return for maintaining a higher minimum balance. MMAs come with check-writing privileges and are insured by the FDIC or NCUA, which are federal agencies.

 

Don’t confuse MMAs with Money market funds. Money market funds are offered by investment banks and are not federally insured, which means you could possibly lose money investing in a money market fund.

 

Insurance

The Federal Deposit Insurance Corporation (FDIC) insures MMA deposits and the interest accrued up to $250k. FDIC insurance protects the money in your MMA the same way it does in regular savings accounts. If you open an MMA with a credit union, instead of with a bank, savings up to $250k are insured by another federal agency called the National Credit Union Administration (NCUA).

 

Availability

Accessing your money is easy. Unlike regular savings accounts, you can usually make withdrawals from a MMA by online transfers, checks, debit cards, or ATM withdrawals. Some banks limit the number of withdrawals you can make per statement cycle. Since your goal is to save, this shouldn’t pose a problem.

 

Interest

Online banks often offer higher interest rates, so your savings grows faster. The interest rate you earn with an MMA can be determined by several factors, including the bank you use and the amount of money you deposit. Shop around. While some banks require a minimum balance and charge a fee if you dip below it, other banks will not only waive the minimum balance you must maintain. They allow you to open and fund your account with any amount.

 

ATM fees

If you’re partial to making ATM withdrawals, look for an MMA that waives ATM fees. Some banks extend this waiver nationwide, and will even reimburse you for ATM fees charged by other U.S. banks.

 

Cash out

You may close an MMA whenever you wish, without penalty. Should you need assistance, or simply have questions, 24/7 live customer support is pretty much the norm.

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