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Money market savings accountIf you are looking to get a higher interest rate as compared to a traditional bank savings account then a money market savings account is your option. This is a good investment for people and works in similar way to the normal savings account. The money market savings accounts are classified as liquid savings accounts. With these accounts you are allowed to write a specific number of checks every month and you are entitled for a higher interest rate. These accounts are available with most of the banks and the credit unions and these accounts are insured up to $100,000 by the, FDIC of the NCUSIF.
About money market savings account
With money market savings account you can get interest rates up to as much as twice the interest rates available with the regular savings account. However, with these accounts you would have to deposit higher starting balance ($1000-$2500) in comparison to the normal savings account.
It is usually seen that these accounts are available with online banks and there is a lot of competition among the banks giving the best rates and convenient access to its customers. These accounts are limited by the federal regulations to just 6 telephonic, electronic or pre authorized transactions in a month. You cannot use more than 3 checks, drafts or debit transactions in a month and if you make more withdrawals than these then you would have to pay a certain amount of fees. You should always go through the instructions before you sign up for an money market savings account.
How does the money market savings account work ?
When you open a money market savings account then the bank pays you interest on the money that you deposit and leave in the account. The bank then gives out this money as loans to other people but would charge interest rate a bit higher for the loan than what is paid on the account. The interest rate on the money market savings account is compounded on a daily basis and is paid on a monthly basis. The best part is that the bank would be paying you an interest on the money that the bank is paying you the interest on the money that they have already loaned to you.
The interest rate paid on the money market savings account varies slightly from one lender to another. This is because of the fact that banks are finding it difficult to get customers to open these accounts. Hence they offer higher interest rates. Another main point about these accounts is that more the money that you have in the account the higher interest rate you get with these accounts. You should always verify with the bank about the interest rates that they charge and how do they charge.
How much can this account cost you?
Similar to any savings account you can withdraw money from your money market savings account as and when you like. However, there is a limit of 6 transactions every month with these accounts. If you fail to maintain the minimum balance in your account then the bank would charge you a fee of around $5. Moreover, if you make any extra withdrawals then you would have to pay a fee of $5-$10 for every extra withdrawal.
When you sign up for a money market savings account you should make sure that you check the fees and the services offered by different providers and also other details about the account. You should make sure that you compare the account offers from different providers and then choose the bank that gives you the most feasible account.
Money market savings account providers
Below are mentioned some of the providers for the money market savings account.
Farm Bureau Bank:
Wachovia:
Capital One:
GMAC Bank:
Washington Mutual:
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