If you’re interested in building your savings while still having easy access to the funds, a money market account might be a good option for you. These accounts allow you to draw money out on an as-needed basis while what remains in the account earns you slightly higher interest than a regular savings account. Here are the basic things you need to know about money market savings accounts.
Easy access to funds
Money market savings accounts typically have convenient yet restricted checking or debit card features. Your financial institution generally will limit how many transactions or withdrawals you can make in a single month, which is usually six. It’s especially useful if you need to have a backup source of emergency funds, since you can withdraw without paying a fee as long as you stay below your monthly transaction limit.
Easy to open
You can open a money market account just as you would a savings account. Simply deposit your money and the financial institution will pay the agreed-upon interest rate. One thing to note is that money market accounts are unique from traditional savings accounts because they usually require a specified minimum initial deposit. The minimum to open a money market, or Power Account, with Direct Financial is $1,000. As a reward for making this higher deposit, you usually earn a higher interest rate compared to a traditional savings account.
You should also consider whether you need to maintain a minimum balance in the account at all times. Should your account balance dip below $1,000, there is no penalty, but you will not earn any interest
Safety
One of the key benefits to a money market account is that it is low risk. The money you put into a money market account is insured by the National Credit Union Administration (NCUA). This provides you with a safety net, as these special savings accounts are often considered low risk. Even in a down market, money market savings accounts often generate a low single-digit return for investors, which can be quite attractive if other interest rates are falling.
Choosing the best account
If you’re interested in opening a money market savings account, do your research and shop around for the best interest rate you can find.
During your research, always check for any fees that may be involved in an account. Be sure that the benefits of a certain account outweigh the costs if an institution does charge fees. It’s often best to continue your search and select an institution that doesn’t charge these fees.
Wondering if a money market account is right for you? Get all the information you need about whether this convenient and flexible form of savings account is an ideal option for your situation by contacting Direct Financial today.