What is a money market account and how to open one?
A money market account is a type of savings account that allows you to earn a higher interest rate than what you would get with an ordinary savings account. Find out if it's right for you by reading this post!
Understand how money market accounts work
Money market accounts are a type of savings account that offers a higher interest rate than traditional checking or savings accounts.
But how do they work, and what should you consider before opening one? Here’s everything you need to know about MMA accounts. Read on!
What is a money market account?
A money market account (MMA) is a type of account that comes with features of savings and checking accounts.
However, it is considered a savings account in which you can write checks and use a debit card to make purchases.
This type of account typically has transfer and purchase limits, usually six a month. ATM withdrawals are generally limited, too, as a way to help you keep the money in your account safe and profit from it.
MMAs are perfect for people who want to save money without tying it up in a long-term investment. Also, it typically offers slightly higher interest rates than a regular savings account.
In addition, many MMAs require a more expensive minimum balance or deposits than traditional savings accounts. So, they might charge fees to open, or in case you don’t keep a minimum balance.
Finally, money market accounts are FDIC-insured, meaning your money is protected for up to $250,000 in the event the bank fails.
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Pros and cons of opening a money market accounts
Should you open a money market account? That depends on what you need and want to reach with your money.
We have gathered the pros and cons of MMAs to help you decide if they are a nice shot for you.
- First, the most attractive feature of an MMA compared to other savings accounts is it usually offers higher and better interest rates;
- Second, they are better for people who think about short-time savings;
- Third, MMAs provide easier access to your money through debit cards and check writing;
- Finally, a money market account is typically FDIC insured, which means your money will be safe.
- MMs typically require higher minimum balances and deposits;
- Easy access to your funds can be difficult to control if you don’t limit yourself;
- There may be fees if the balance is below the minimum.
Requirements for opening a money market account
To open a money market account, you will usually need to deposit a minimum amount of money, which may be as high as $2,500.
Once your account is open, you will typically be able to withdraw money from your account by writing a check or using a debit card.
Some money market accounts may also offer ATM access, but withdrawals will be limited.
When choosing an MMA, be sure to compare the fees and interest rates offered by different banks to find the account that best suits your needs.
Want to open a money market account? Follow these 7 easy steps!
Before opening a money market account, it’s important to research the fees and requirements of different banks to find the one that best meets your needs.
So if you’re looking forward to opening a money market account soon, follow these seven easy steps:
1. Decide how much money you want to deposit
Most money market accounts have a higher minimum balance requirement than a regular savings account.
So you’ll need to ensure you have enough money to meet that requirement before opening an account.
2. Research different banks and credit unions
Once you know how much money you want to deposit, you can start researching different banks and credit unions to find the best money market account for your needs.
Look at the conditions, check if they fit your pocket, and have the commodities you are looking for.
3. Compare interest rates and fees
When comparing different money market accounts, be sure to pay attention to the interest rate and any associated fees.
That way, you won’t be caught in any hidden fees situation and will know where your money is going.
4. Consider the account’s features
In addition to interest rates and fees, also consider the account’s features, such as whether it offers check-writing privileges or online bill pay.
Also, look for withdrawal limits and how you’ll be able to access your money in case of emergencies.
The more you get informed about these things, the less you’ll have to worry if you need them in the future.
5. Read the fine print
Once you’ve selected the money market account that’s right for you, read through the fine print before opening it.
It might seem boring, but it’s necessary. It will help ensure that you understand all of the terms and conditions associated with the account.
6. Open the account and start saving
After you’ve read through the fine print and are confident that you understand all of the terms and conditions associated with the account, you can go ahead and open the money market account. Then, start saving!
7. Review your account regularly
Once your MMA is open, it’s important to review it regularly to ensure it meets your needs.
If not, don’t be afraid to switch things up and move your money to a different bank or credit union.
Money market accounts can be a good option to consider if you’re looking for savings products that offer interest, allow more withdrawals, and are FDIC insured.
We hope this article has helped you clear your mind about MMAs, you have the tools to choose if they work or don’t work for you.
Moreover, now that you know more about how to use your Money Market Account, you can check out our post below to learn about checking accounts!
About the author / Suzana Brito
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