Determining and implementing a savings plan is key to financial stability. Your deposits will grow through earned interest and you can easily utilize your funds when necessary. However, there are other types of accounts available that have many of the same features of a savings account but offer a higher interest rate. A money market account is one such account. A money market account does have some restrictions (access to funds 6 times per statement cycle) however when compared to savings accounts, the interest rate is generally higher.
To best compare money market accounts keep these things in mind:
• Minimums. Money market accounts generally require a minimum deposit and minimum balance. Sometimes these amounts are the same but they can vary. A minimum deposit is what is required to open the accounts. A minimum balance is the amount that must be kept in the account to avoid fees and earn interest on the account. Be sure to choose an account where you can easily keep the minimum balance as fees will reduce your savings.
• Interest. The amount of interest and the way it is calculated will determine the growth of your savings. You should choose a high interest rate to ensure your savings grow quickly but read the fine print – do not be drawn in by an offer where the interest rate offered will change after an initial period. Some institutions will also offered tiered interest where the higher the balance, the higher the interest rate. Be sure that your deposit will be earning interest so that your savings can continue to grow.
• Terms & Conditions. Be sure to read about all of the features and requirements for the account being offered. Sometime there are additional requirements that must be fulfilled to open a money market account. If you have questions call Customer Service to get clarification.
Money markets can be a good alternative to savings accounts but consider your financial needs before opening an account. Make sure that this type of account is suitable for your financial needs before committing to an account. If this type of account is appropriate use the tips listed to find an account that fits your needs and watch your savings grow.