Money market accounts are savings tools offered by banks that are used to save money as well as provide liquidity. Money market accounts often offer higher interests than interest bearing checking accounts yet offer the account holder the ability easy access to their invested funds.
Money market accounts are often used as an alternative to using just a checking account for transactions and a savings account to earn a higher interest rate. These bank accounts are not designed for everyone. There are both advantages and disadvantages to money market accounts.
The main advantage of the money market account is that they combine the features of a standard checking account and a savings account. These accounts usually carry no fees for checking facilities while providing a competitive interest rate.
A money market account or money market deposit account is a standard bank product and is therefore covered by FDIC insurance at FDIC insured financial institutions. The FDIC insures money market deposit accounts up to $250,000.00.
Money market deposit accounts are fairly liquid accounts, meaning the money can be accessed easily. Even though money market accounts offer some of the highest yields available with bank savings account options, money market account have high liquidity and they do not carry penalties for withdrawals before maturity.
Bank money market account generally allows account holders to have easy access to your money through checks, transfers, and even ATMs. Check writing privileges are one of the significant advantages found in these savings accounts. However, banks will restrict the number of withdrawals that can be made per month. Money market account transactions made via check or electronic transfer is generally limited to no more than six transactions per month.
A number of banks offer money market deposit account rates on a tiered scale. With a tiered interest rate scale, the more money that the account holder deposits in the account the higher the rate of interest that is paid. A disadvantage with the interest rate paid on these accounts is unlike a bank certificate of deposit which has a fixed interest rate; money market accounts have a variable interest rate. The variable interest rate means that the interest arte can be changed at anytime at the banks’ discretion.
Money market accounts can be a very good tool to help build savings funds or as an emergency fund. In addition, these accounts are ideal choice for parking money prior to making major expenditures whether these expenditures are occur only occasionally or are on a monthly basis.
The key to these bank accounts is that they offer higher interest rates with the ability to access the funds for payment transactions or to move to another investment or savings account when better opportunities arise.
Most banks provide high interest money market accounts. Always compare money market account rates and other bank savings rates thoroughly before committing to any one financial institution. Even in a low interest rate environment, the difference in interest rates between the best banks and the competition can be considerable.
Additional money market resources, including the top ten money market account rates and top savings account rates can be found at Savings Account Rates or Money Market Account Rates. To see information on the best online banks refer to Best Online Bank or the best online savings accounts available see Best Online Savings Account.