Source: Informa Research Services
(03/05/2010) When saving money, most of us assume we should use a regular savings account. Usually a savings account requires no monthly fees and it is a great method of putting money away for a rainy day, but are there other options?
Investing funds in a money market account is a great way to make your money work for you. They are similar to savings accounts, but generally they tend to pay higher interest rates than a regular savings account. Money market accounts may have additional stipulations such as a higher opening balance requirement, a limit on withdrawals, or a higher minimum balance to waive monthly service charges (be sure to read the fine print when opening your account). Money market accounts are typically tiered offering higher rates with the more money you deposit in it and are FDIC-insured (to a limit).
One way a money market account differs from a certificate of deposit (CD) is that the rate on a money market account is variable and can change from day to day, where as the CD has a fixed rate and term. Furthermore, with a money market account, your assets are liquid meaning you can add or remove money as needed. For the person looking to save who needs the flexibility to add or remove money, a money market account could serve as the perfect option.
Do your research when deciding on a bank to open a money market account with and don’t be afraid to venture away from your current financial institution. A great way to select a bank or credit union is to compare rates online by using rate tables on ERATE.com.
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