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Learn about money market accounts and why they are important.
What is a Money Market Account?
A money market account is an interest-bearing account that typically pays a higher interest rate than a savings account, and which provides the account holder with limited check-writing ability. A money market account is worth considering if you’re looking for a safe place to deposit a large chunk of money and earn some interest. Money Market Accounts also earn compound interest like savings accounts do. Money Market accounts pay a higher interest rate, so it will earn more compound interest over time.
Money Market Accounts vs. Savings Accounts
Money Market Accounts typically pay an interest rate between 1-3%, while a Savings Account only pays between 0.15-0.5% interest. A Money Market Account usually requires a minimum deposit of around $2,500 and only lets you write six checks a month. A Money Market Account is for people that want their money to grow over an extended period of time, while a Savings Account pays very little interest so it’s used for short-term investments.
Benefits of Money Market Accounts.
Some benefits of a Money Market Account are your bank’s money market account has a high interest rate, it gives you access to funds in a pinch, allows to write up to six checks per month, you want a debit card on your account that you can use up to six times per month, you plan to deposit several thousand dollars and want the safety of an insured account at a bank or credit union.
Quiz
Sources: https://www.investopedia.com/terms/m/moneymarketaccount.asp
https://www.nerdwallet.com/blog/banking/faq-money-market-account/
https://www.youtube.com/watch?v=jZ8_09MnOpk
https://quizlet.com/_5psaxh
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