The Advantages of a Money Market vs. a Savings Account
For a person with cash in their hand, they might consider a traditional savings account or the money market. The two types of accounts are similar in some ways but they do have their differences as well. Both accounts pay interest on deposits but the rate of interest varies. The money market pays a higher interest rate when compared to a savings account but the account holder has limited check-writing abilities. The account holder is also expected to maintain a higher balance compared to the savings account and in exchange they get a higher interest rate. You can also make as many deposits as you wish in either of the accounts.
If you are torn between the two accounts, below are some advantages of a Money Market vs. a Savings Account.
One major advantage of the money market is the rate of interest paid on the deposits. In almost all instances, the interest rate paid on the money market account is higher when compared to the rate paid on the savings account. The higher interest rate is the main benefit money market accounts have over the traditional savings accounts. Many credit unions also offer tiered interest where the interest rate paid increases as you deposit more money into the account. As interest rates rise, the money market account is most preferable since the interest on your money will be adjusted upwards and you get higher yields. Savers are therefore rewarded with higher yield by putting their money in a money market account as compared to a savings account.
All deposits into the money market accounts are insured and backed by the Federal Deposit Insurance Corporation (FDIC) but only to amounts up to $250000. As long as the credit union has insured its accounts, you cannot lose your money even if the credit union goes out of business. The entire amount deposited and all the interest accrued up to the maximum amount allowed is protected by law 100%. This reduces the risk you take with your hard earned money.
Another main benefit associated with a money market account is that you have access to your money at all times. In some instances, you are allowed to make up to six withdrawals in each cycle of your statement. In case of an emergency or you need money fast, all you have to do is fill a form and get the money at the counter. Some credit unions allow you to get an ATM card upon request and you can access your money directly from the ATM. This means your money is not tied up like in the savings account. The ability to access your funds when you need them without long procedures is one attractive feature of the money market account. You have the option of writing a check or withdrawing cash from the ATM; this offers you the flexibility that you will not get with most savings accounts.
You need the right information to make an informed decision concerning your money. You must consider the different alternatives available for your money. When considering the Money Market vs. a Savings Account, weigh the benefits you get to enjoy from the money market account. Take control of your financial future today and consider opening a money market account.
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