Saving money can make a huge difference in reaching your financial goals and planning for the future. To make the most of your savings, choose a savings account that supports your specific needs. One option to consider is a money market account.
What is a Money Market Account?
A money market account is a savings account with the added benefit of having some features similar to a checking account. So you can benefit from the higher returns on your deposits, but keep the flexibility of having access to your funds when you need them.
How Do Money Market Accounts Work?
Each financial institution has specific guidelines for their money market accounts. Typically, these accounts have particular balance requirements to determine the dividend rate. So accounts that have a higher amount of money will likely qualify for a higher rate, allowing you to earn more money over time.
Many money market accounts also offer checks or debit cards and allow you to perform a certain number of transactions per month. This gives you access to your money when you need it.
Check with your financial institution to find out the details for their money market accounts.
How are Money Market Accounts Different than Savings Accounts or CDs?
Access to your money is one way that money market accounts are different than savings accounts or CDs. Since money market offer certain checking account-like features, it can be easier to access money when you need it. Certificate accounts, like CDs, also make you keep funds in the account for a specific amount of time or risk a penalty.
Dividend rates are also different between each savings account type. So before choosing the option that is right for you, consider your specific needs. If you think you may need to access the funds but still want a great rate, a money market account could be a good fit. If you are able to keep the funds in the account for an extended period, a CD could work.
What are the Benefits of a Money Market Account?
Money market accounts can be a great option for people who want to earn higher dividends without tying up their money in a way that makes it inaccessible.
Benefits of money market accounts include:
- Easier to access funds than some other savings account options
- Dividend rates may be higher than a traditional savings account
- Safely save money while earning interest
- Low risk allows for a safe investment
Make sure to look at the account details before choosing the money market account that works for you.