What makes a money market account a high interest money market account? The obvious answer is that it bears a higher interest rate than a normal money market account. On that note, a money market account is basically a savings account that bears a higher interest rate. In addition, the account owner has to follow certain rules in order to obtain and maintain a money market account. There are many advantages and disadvantages of investing in this type of account. Do the proper research to determine which type of banking account is suitable for your needs.
Basics of a Money Market Account
There are a few basic rules that you have to follow in order to have a money market account. First, you are required to maintain a monthly minimum balance in your account. The required amount depends on the banking institution. Second, you are limited to the amount of monthly withdrawals you can make without having to pay a fee. Third, you are allowed to write a specified amount of checks on your account. Fourth, a basic money market deposit account is insured by FDIC. If you follow these few guidelines, you will meet the requirements for a money market account.
What Makes It a High Interest Money Market Account?
How is it possible to get a higher interest rate on a money market account? Usually this is determined by where you open your account. Banks and credit unions usually pay out lower interest on their money market accounts. If you want to get a high interest money market account, you will probably have to research online banks in order to get the best rate. Online banks do not have the everyday overhead expenses that conventional brick and mortar banks possess. As a result, they are able to offer you a higher interest rate on your money market account.
Is a High Interest Money Market Account Right For You?
There are both pros and cons to having a high interest money market account. The main cons are that you are limited to a certain amount of monthly withdrawals and you have to maintain a monthly minimum balance. Before you invest in this type of account make sure that you can easily meet these monthly requirements. If more monthly banking transactions are needed, then maybe a high interest money market account is not right for you. Your goal is to keep as much money in your account as possible in order to earn a high interest amount.
Although these restrictions may seem like disadvantages, they are actually helpful to you in the long run. The less money you are able to take out of your account, the more you will be able to save. If you don’t have the willpower to save, investing in a high interest money market account will make it even harder to spend your money.
Using a money market account is a smart and disciplined way to save money. It bears more interest than a regular savings account. Research online banks and find a high interest money market account that suits your needs.