Money Market Account
The money market account is a type of deposit account that pays higher interest than regular savings or interest-bearing checking accounts. These financial products are offered by banks and credit unions. While money market accounts pay higher rates, they also demand higher initial deposit balances, usually of the order of 1,000 USD to 2,500 USD depending on the issuing financial institution. On the plus side, holders will be offered higher interest rates in proportion to higher levels of funds deposited in their accounts. Holders will be able to withdraw funds, but such withdrawals are limited to six per month, of which a maximum of three withdrawals may be made by check. Holders of money market accounts are also subjected to a schedule of charges that prospective clients should examine in detail before signing any contracts.
Money market accounts offer higher rates of interest that are compounded on a daily basis, and paid at the end of each month. What’s good about this is that the bank or credit union is actually compounding interest on interest, virtually paying you over the odds to keep you as one of their satisfied customers. On the downside, if holders let their balances fall below certain set threshold levels, then interest payments may fall, and indeed stop altogether. Additionally, some banks may charge money market account holders each time they withdraw funds from their accounts.
Security is a big issue with most deposit account holders, and money market accounts are protected by the Federal Deposit Insurance Corp (FDIC). This is an organization of the federal government that insures all money market bank accounts in the unlikely event that the bank should go bankrupt. Since the FDIC was established in the early 1930’s, not one bank or credit union client has lost money to a bank default. Money market check accounts should certainly be considered by those customers with extra cash at their disposal looking for a safe haven for their funds providing a competitive rate of interest.
For more infomation on bank accounts choose from the list below. |
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Banking - Business Finances - Economics - Insurance - Investing
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