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If you’ve done a little bit of digging on savings accounts, you’ve probably heard of money market accounts.
This article will teach you everything you know about them and help you decide if they’re right for you.
What is a money market account?
An money market account (MMA) is a bank account that earns interest, but makes it easier to get cash than a normal savings account.
Interest is a small return that a bank pays you for storing your money with them.
Like checking accounts, money market accounts come with debit cards that allow you to spend and move your money easily.
Although like traditional savings accounts, they do have restrictions on how often you can use your money.
Who should open a money market account?
Money market accounts are for anyone who wants to earn interest but still have easy access to their money.
But remember, it is a savings account and the number of times you can use your money is limited.
What’s a money market account good for?
There are many benefits of money market accounts. If you’re thinking about opening one, these are main reasons to:
- Higher interest rates
Some MMAs earn more interest than traditional savings accounts. So, you can get more cash back on your savings and have easier access to that money. - Compound Interest
This means each day your interest rate will apply to the current amount in your account. In other words, you’ll gain interest on your interest. Not a bad deal. - Checking Benefit
Most money market accounts give you a debit card and checks that you can use to take out cash at an ATM or pay a bill.
Things to watch out for
- Minimum balance requirements
Some accounts will require you to have a high balance to get the best interest rates. Always read the fine print. - Service Charges
Some accounts charge you for maintaining the account. Once again, read the fine print. - A limited number of transfers per month
It’s still a savings account, which means transfers and purchases are limited. See what the rules are before you open your account. - ATM fees
Most accounts have a network of ATMs you can use without a charge. Check yours before you open your account if ATM access is important to you.
Our last word of advice
When you’re comparing different money market accounts, look at the annual percentage yield (APY).
This percentage is the interest rate plus the effects of compound interest. It’s the most accurate number to use when you’re shopping around for different money market accounts.
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