When you open a savings account to prepare for the future, you have many options that offer a higher interest rate than a basic account, including a money market account.
These savings vehicles, which are also called money market deposit accounts or money market savings accounts, are not the same as money market funds, which are investment products. The key difference between the two is money market accounts are insured by the Federal Deposit Insurance Corporation or National Credit Union Administration, while money market funds are not covered from loss.
In exchange for competitive interest rates, money market accounts come with some federal rules governing how and when you can access your funds. You may make no more than six preauthorized withdrawals, automatic or telephonic transfers, checks, drafts, and debit card or other similar transactions from your account per statement cycle.
If the funds in your account meet certain minimum or average daily balance thresholds, there is no monthly service fee. Plus, if your account meets a separate minimum balance, you can accrue interest.
Is a money market account right for you?
There are several types of accounts that can offer high interest, so you'll need to determine whether a money market account is the best product for your savings goals. Here are a couple of questions to ask to help you make the decision:
- Can you maintain a high balance? To avoid fees, you'll need to maintain a minimum balance that is noticeably larger than what is required for a standard savings account.
- Can you sit on your money? Given that there are restrictions on withdrawals, you should set aside funds that you don't need to access often.
For more information about smart ways to manage your finances, contact Landmark Bank.
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