Monday, September 23, 2013

Money Market Accounts: They're really cool, I promise.

This is a food market. The obvious correct choice for a photo for money market accounts.

Read this if: 

1) You find that checking accounts and savings accounts are lacking something. It's okay if you don't know what that something is. 


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Everyone knows about checking accounts and savings accounts, but there is a kind of account that sort of falls in the middle: a money market account. It doesn't offer anything mind-blowing, but I think it's good to know that you have more options than you think. 



What is it? 

Money market accounts (MMAs) are basically savings accounts, but have way more options when it comes to accessing the money. 

What are the benefits? 

MMAs offer competitive interest rates just like savings accounts. You can write checks and use a debit card to access the money (with certain limits, like not withdrawing more than six times a month). Traditional savings accounts don't have this feature, and it might not matter for most people, but sometimes it might help. 

For example: If you had to write a check for a significant amount, but you knew it was a one-time thing, and you did not have enough in your checking account to cover it, you could write a check from your MMA instead. 


Are there any drawbacks? 


Some MMAs have a minimum deposit, but it really depends on the bank that you open one with. 

Who should get one? 


I think an MMA is a good option for anyone, especially since the money is FDIC-insured. 

Why would anyone get a savings account over an MMA then? 

I Googled extensively trying to find an answer to this and it seems that the bottom line is there really is no difference except the ability to write checks. 

WARNING: A "money market account" is NOT the same thing is a "money market mutual fund." 

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As always, contact me with questions or suggestions! You can either comment directly on the post or send me an email to moneymattersjoan@gmail.com. 

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