Do you feel you’re doing the right thing by keeping your money in a regular savings account? Many people feel satisfied when they see a large chunk of their money in a savings account, but you should understand that there are other options that can be more beneficial to your financial health. One is the use of a money market account, which proves ideal for people who do not only want to store but grow their money as well. But of course, these accounts aren’t created equal. You need to find the best money market rates to help you choose what account suits your needs.
Difference Between Money Market and Savings Account
It is a savings account that comes with extra features such as the ability to use debit cards and write checks. It’s worth noting that money market interest rates are usually higher than those of regular savings accounts, but the difference isn’t astronomical. Still, MMAs prove to be a worthy choice just for the perks alone. Also, don’t confuse a money market account with a money market fund. The latter is a type of investment fund, which is another way to grow your money.
The Benefits of Opening a Money Market Account
This savings account is an excellent choice if you want a safe place to keep a huge sum of money while earning relatively high interest. It still gives you access to funds whenever you need to make a purchase. Opening an account also means being able to write checks and use a debit card for a limited number of times. Money market accounts are also insured by the Federal Deposit Insurance Corp. so there’s no need to worry about your money suddenly disappearing.
How to Compare Interest Rates
When starting out, your first option is your current bank. But be sure to shop around and look at other money market accounts. It’s always tempting to base your decision on interest rates alone, but you should consider other important factors that impact your finances in the long run.
Many banks offer a “teaser” money market rate in an attempt to lure in new clients. In most cases, though, this rate expires after a few months. Others require a monthly maintenance fee and a high maintaining balance.
Crunching some numbers goes a long way in helping you choose what money market account to open. On the surface, it might not seem like much to spend $5 dollars a year to maintain and manage your account. But you have to ask yourself whether it’s really worth the few extra bucks.
If possible, look for a money market account with zero monthly maintenance fee. Be sure that you can maintain the minimum balance required by the bank as well. Otherwise, you might have to pay a hefty fine if you fall below their threshold.
Shopping around for the best money market rates takes time, but it’s something you couldn’t skip if you want to grow your money efficiently.