If you’re one of the lucky who has $1,000 or more in a ”rainy day fund” just sitting around in a savings account earning minimal interest because you want to have access to it “just in case”, a money market account might be just your ticket to earning a higher return.
CD’s, or Certificates of Deposit, are very popular in the banking industry for the amount of interest they collect in a relatively short period of time. The only problem with them is the penalty that you’ll be charged in the unfortunate event of you needing your money- in any type of emergency situation.
Money Market Account Basics
First of all, a Money Market Account is, in essence, a checking account that yields interest. You are allowed a maximum amount of checks to be written each month, typically no more than 3. Minimum balance requirements on a Money Market Account, as well as the minimum withdrawal or check amount, will differ between financial institutions, so be sure to check with your bank prior to opening one.
Even though there are minimum balance requirements, the fee charged to you if your balance falls below the minimum will be substantially less than the penalty charged with the same situation involving a CD.
All bank issued Money Market Accounts are covered by FDIC, the Federal Deposit Insurance Corporation, a federal agency which insures deposits up to $100,000. The FDIC is also responsible for covering traditional savings and checking accounts in the same manner within the entire banking industry.
Credit unions are also home to Money Market Accounts nationwide. The basic difference, other than the differences between credit unions and banks, is that deposits are insured within credit unions, up to $100,000, with the NCUA (National Credit Union Association).
Getting a higher return on your hard earned money while someone else is using it, all while having the ability to access it at any time certainly sounds like a great deal. This is because making money with your money is just one more part of ”The American Dream”.
