You begin to earn interest on your balance immediately.įinancial institutions compound interest monthly on traditional savings and checking accounts. It isn’t an investment option in 2020 because the rate of inflation usually beats the return of a money market account, but this choice can preserve your savings.Ĥ. The limited access that you receive with this account is what creates the higher interest rates that become available. When you need a place to park your money outside of the risk of market exposure, this option gives you a way to still experience some growth without an issue of loss to consider. That means your account will remain safe, even if your financial institution goes out of business for any reason.
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Individual money market accounts receive up to $250,000 of insurance protection in the United States. Even if you don’t put your money into one of these recommended places, most local institutions provide a boost of 0.003% or more when you shift from a standard savings account to a money market account. It offers a 1.85% APY with only a $100 minimum balance. NerdWallet ranks the best choice for 2020 as the CIT Bank Money Market Account. Several other providers are currently giving rates in the 1.75% range. UFB Direct offers a 1.9% APY if you have a $25,000 minimum deposit available. If you have $5,000 that you can put into this option at BMO Harris, then you can earn an APY of 1.95%. Some money market accounts provide a significant return.Īlthough the average APY for a money market account is fairly low, there are some notable exceptions to consider. Writing checks is also a possibility, and some jumbo accounts may let you use a debit card up to the maximum number of allowable withdrawals.Ģ. Most allow you to take cash out from your local branch. Although the returns are not significant with a money market account, you’ll receive a higher APY in most situations than with a standard savings account while having limited access to your balance each month. Should you need that cash for any reason, then you would end up paying a penalty on that amount – a figure that could even represent a loss of principal. If you were to put your money into a certificate of deposit, then it would get locked away for a predetermined amount of time. You have more access to your money than in other savings options. List of the Advantages of a Money Market Accountġ. With interest rates continuing to be at historic lows, a review of the money market account advantages and disadvantages is worth considering if you are looking for ways to improve the returns you can earn. That means you won’t lose the entirety of your deposit, even if your financial institution goes out of business for any reason. Most offer a competitive interest rate in exchange for meeting a balance requirement or a minimum deposit amount.Īs with other banking accounts in the United States, money market accounts receive insurance through the Federal Deposit Insurance Corporation (FDIC) at banks or the National Credit Union Administration (NCUA) at credit unions. It comes with some checking features that may include a debit card or checks so that you can access your money on a limited basis each month.
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Compare savings accounts now to find the right fit for your needs.A money market account is a savings instrument that is similar to what you’d receive with a traditional savings account. Now that you know the basics of money market vs savings accounts, discover the unique differences of savings accounts available from Santander Bank. However, in return for that higher interest rate, there may be stricter requirements for opening an account, such as a higher opening deposit and monthly balance requirement. A money market account typically offers a higher interest rate than a traditional savings account. Rates and RequirementsOne of the main differences between money market and savings accounts is the interest rate. You can only make 6 transfers or withdrawals per service fee period, unless they are made in-person at a branch or at an ATM 1 Rates between account types may vary, but both accounts earn interest. Interest rates on savings and money market savings are subject to change at any time without notice.
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For more information visit the FDIC website. Up to $250,000, per depositor, per category of account ownership, and per institution. Money market accounts and savings accounts have many differences, but they have a few things in common, too.