A money market account is a hybrid between a checking and savings account. It has features of a checking account like check writing privileges and a debit card. It also has the interest bearing feature of a savings account.
There are some differences and restrictions though. These vary from bank to bank so it’s important to check with several different financial institutions to find the best one for you.
Although you are allowed to write checks and use a debit card, there is a limit on the amount of withdrawals you can make each month. Only six total withdrawals are allowed per month. Of those six only three can be made by check. If you exceed these limits the bank will charge you high fees or possibly close your account. Some banks don’t count ATM transactions so be sure to ask. You can usually make unlimited deposits each month.
Another thing you should check on is whether there is a minimum balance required. With some banks, you must maintain a high balance in order to avoid fees. However, these minimums vary wildly from one bank to the next so don’t be discouraged if your bank’s minimums are too high. Call or go online and find another bank that has minimums you are more comfortable with. Remember you can work with as many banks as you like.
Even though they both pay interest, money market accounts usually pay higher interest rates than typical savings accounts. With some banks, the more money you have in your account, the higher the interest percentage you earn. Ask your bank about this to make sure you earn the most possible.
As with most interest bearing accounts, the interest rate is usually variable. This means it fluctuates based on rates set by the Federal Reserve.
Interest will usually compound daily and be paid monthly. Your money can really add up when it’s left alone to grow. To find out more about compound interest check out this section.
Like most bank accounts, you will receive a statement each month showing debits and credits to your account along with any fees or fines. These should be recorded in your account register. The statement balance and your account register balance should always match at the end of the month.
A money market account is a great place to put your money for both flexibility and interest-earning potential. It’s the best of both worlds and a great addition to your money management plan.
If you’d like to find out how you can earn even more interest with your money, check out the section on Certificates of Deposit (CDs).From Money Market Account to Banking Information