Money Market Account Interest Rates

What Is This, And How Does It Affect You?

What is a money market account?

A money market account is a type of savings account wherein you deposit your money and then the bank pays you a monthly interest payment. The difference with a money market account is that the bank is investing your money into the financial marketplace while they have your money. This is not important, really; all you must know is that a money market account is a good choice if you want to invest your money safely and securely but still see a good amount of return on your investment.

Benefits of a money market account

The primary benefit of a money market account is that it usually has a higher interest rate than a savings account. Since the bank is investing the money and trying to earn a higher return for their own profit, they are more willing to pay you a good interest rate for your allowing them to use the money. Most banks will allow you access to your money at any time, usually even through ATMs. At other banks, there is a limit of time that you must allow your money to remain in the money market account. If you withdraw your money sooner, you will be penalized.

Requirements and other penalties of a typical money market account

Depending on your financial institution's own unique policies, there is most likely a minimum amount that you must keep in your money market account. This minimum is usually within the range of $250 to $1000. You cannot open the account with an amount lower than the minimum. If the balance should ever fall below the minimum after the account is open, then most banks will stop paying interest on the account or pay interest at a lower rate. They may even begin to charge you a monthly fee until you replenish the account and raise the balance below the required amount.

Consider a money market account

If you have some money to invest beyond just what is regularly in a savings account, and you want to get a better interest rate than a savings account, then a money market account may be the right thing for you.