Is Opening a Money Market Account Right for You?
A money market account is a type of savings account with a few features of checking accounts. For those who are looking for an account that lets you earn interest on the deposits you make, but who also want to be able to access the funds more readily, then this account may be a good choice. However, it is not always the best option for all consumers. That’s why working with a local community bank can help — a bank’s team can offer guidance on what all of your options are and pinpoint the account type that will best for your unique situation.
What Does a Money Market Account Offer?
As a savings account, money market accounts provide consumers with the ability to earn interest on the money within their account. The amount of interest you earn depends on many factors, including current rates and market trends. However, most of the time, this type of account will earn interest that is slightly higher than a traditional savings account, providing the consumer with a better earning opportunity. If you plan to put away a significant amount of money, this can increase your earning potential over time significantly.
However, money market accounts go further. With a traditional savings account, you could face fees if you withdraw funds too frequently. However, money market accounts provide a more flexible solution. These accounts work much like checking accounts in that they let you write checks on the money and withdraw it as you need to — without incurring fees.
Things to Keep in Mind
It may sound like money market accounts are perfect for everyone, but they have some key characteristics that can make them a bit more complicated for some people:
- Some offer transaction limits. If you plan to write dozens of checks each month or take out money frequently, this may limit the benefits here. Be sure to make note of any transaction limit on your account before opening one.
- Minimum balance requirements may exist. Find out if the account has a minimum balance requirement, and be sure you can meet it.
For these reasons, money market accounts are best for many people who want to put aside a significant amount of money and earn good interest on it, but who also need to borrow from it in some cases. They work well as emergency funds and they can be a good option for those who plan to make just one or two transactions a month out of them. For others, other types of savings and investment accounts could be a better fit. To learn more about what type of account is best for you, contact CNB today.