Higher Interest with Money Market Accounts

Money Market Accounts are basically savings accounts that are offered by banks and credit unions. The difference is that they pay higher interest, require that a higher minimum balance is maintained (this can be between $1000 and $2500). This type of account only allows three to six withdrawals per month, whereas regular savings accounts do not have a withdrawal limit.

Money Market Accounts also differ from savings accounts in that the account holder can write up to three checks per month. Banking services like regular savings accounts do not allow for any check writing privileges. Savings accounts are protected by the FDIC, Money Market Accounts are protected by the National Credit Union Administration (NCUA); this is a federal agency.

Interest on Money Market Accounts is compounded daily and paid monthly. Interest rates will vary, sometimes greatly, from bank to bank. Also, the more money a person has in a money market account, the higher interest rate the bank will pay on that money. Money can be withdrawn at any time and there is a limit to the number of withdrawals a person can make each month. A minimum balance must be maintained on a money market account, or the bank will charge a small fee.

Due to the various differences in interest rates, minimum balances and fees, and banking technology like online banking an individual should compare banks before deciding which one will best fit their needs for Money Market Accounts. Just like with the checking account, keep up-to-date records in the check register so you can compare it to the statement you receive from the bank every month.

 

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