Money market account interest rates are usually higher than savings account interest rates. Both sets of prices are now about the same. For many MMAs, the minimum deposit or balance is higher than for savings accounts. Continue reading to become an expert on benefits of a money market account and learn everything you should know about it.
Money market accounts (MMAs) are savings accounts that also come with a debit card and a checkbook. Usually, a person can only buy or move money six times per month. Most ATMs don’t have limits on how much you can take out.
Top 10 – Benefits of a Money Market Account
You know how to run a checking account and a savings account well. It would be nice to have ways to save more money and get to it more easily, but your day-to-day banking needs must come first. Right? A money market account could help you save money and plan for the future. “Become a money market expert and link to brokerage for account usage.” “Some banks offer combined brokerage and money market accounts.” “Savings allow stock, bond, and treasury investment but may limit daily transactions.
Check account details for investment restrictions.” “Get investment help before risking savings. Money market deals execute instantly. Local bank/credit union accounts offer quick access. Bank deposits earn immediate interest.” Read more about features of money market instruments subject to expand your perspectives.
High Interest Rates
Money market accounts have done better than savings accounts. To put it another way, Horizon’s Money Market Account has an annual percentage yield of [XX] (as of [DATE]). This is especially helpful if rate hikes are expected in the future. Make your money go further! Becker says that the rate of interest on money market accounts is higher than the rate of interest on checking accounts.
Even though yields are low right now, Denney thinks that a Fed rate hike will cause them to go up. He thinks that there will be three or four 0.25 percent increases this year. He thinks that Fed rate hikes will cause short-term money market account yields to go up.
Security
The National Credit Union Administration makes sure that Money Market accounts are safe. This means you can keep a lot of money in the bank without worrying, even though the economy is uncertain and there is a chance your investments won’t do well. You can put money away without worry!
Buy Real Estate
You can buy real estate as an investment with money from a money market account. Investors and managers of rental properties may be able to link their money market accounts to the properties they own.
You can get the money right away, and the Federal Deposit Insurance Corporation or the National Credit Union Administration will protect you up to their limits. Because of this benefit, some investors can keep up with inflation while lowering their risk.
Check Writing
Money market accounts are different from savings accounts and certificates of deposit (CDs) because you can write checks on them. This makes them more liquid and flexible.
Some money market account providers limit the number of withdrawals, including checks, to no more than six per statement cycle. Even though a federal rule that once limited withdrawals to six per calendar year has been changed, many institutions still have this limit.
Potential Insurance Coverage
A money market account is a safer place to put your money than stocks or bonds. If the FDIC-insured bank fails, your money market account will be safe up to the maximum amount allowed by law. Denney, the president and CEO of the financial advisory firm Prosperity Financial Group, says that money market accounts are a “very safe way to make good returns.”
ATM Withdrawals
Money market accounts that come with ATM cards are just as useful as checking accounts. You can get money from an ATM as often as you need to so you don’t go over your monthly transaction limit. You don’t have to worry about how many times you’ve already used up in a billing cycle.
Even though there are tax benefits to money market accounts, they should still be used to save. Benefits of a money market account offer several benefits over other types of savings accounts, including competitive interest rates and no penalties for early withdrawals.
Accessibility of Funds
People like Money Market accounts because they can be used quickly. Money never runs out on the markets. Most of the time, there are no fees for taking money out of the account, which makes it easier to use than CDs or Share Certificates. Money can only be moved around a certain amount each month. A Horizon Money Market account lets you take out up to six times per month.
Money Market accounts are good for people who don’t know when they might need to get their money out because they can get to their money right away. They are perfect for big expenses that come up out of the blue, like education, home repairs, or medical care.
Some of the things you buy might be more on the spur of the moment, so you might decide to save up for those times. If you put your quarterly tax payments into a Money Market account until they are due, you will earn interest on those funds until you take them out. A Money Market account can be used at any time.
Minimal Balance Needed
Some families don’t have money market accounts because they need at least $25,000 in them. The minimum amount for a jumbo account is $100,000. In America, most families just can’t pay for something like this.
Because of this, a lot of financial institutions have changed what they need for this feature. This account has to have at least $1 in it. Usually, vendors will ask for $250. Some families can make better use of their money this way.
Common Account Benefits
You can get to the money in a money market account in a number of ways, including with checks, debit cards, ATMs, and electronic bank transfers. Becker, who owns Becker Retirement Group, showed what these payments can do for people.
He says that the money market account helps close real estate deals. People who sell luxury items, like real estate, have to pay taxes on the money they make. Becker suggests that people who are selling figure out how much capital gains tax they will have to pay and put that amount into a money market account to earn interest. Becker says that a money market account is great for “just writing a check when the IRS needs the money.”
Convenient Access
Denney says that the fact that money market accounts don’t have an end date makes them very liquid. This is useful if you want to save money for a rainy day or go on a big shopping spree.
You can use the money in your money market account for things like a car repair or a weekend trip that you didn’t plan for. Withdraw cash, use an ATM, or send money to someone else online. But there are limits on how many times you can use money from a money market account each month.
Frequently Asked Questions
When to Choose a Money Market Account over a Savings Account?
If you want to save and grow your money, a savings account may be better than a money market account if the interest rate is the same or higher. But opening a money market account may be a good idea if the interest rate is higher than that of a savings account, you need to buy things occasionally, and you have enough money in the account to meet the minimum balance requirement.
What are the Rules for a Money Market Account?
Federal Reserve Regulation D says that you can only take out six times per month from a money market account. If you take out too much money, you may have to pay fees.
Can you Withdraw Money from a Money Market Account?
Both debit cards and paper checks can be used to get cash out of money market accounts. You can only take out a certain amount each month.
Conclusion
Like a savings account, the interest rate on an MMA is set at the beginning. The interest rate is higher than what you would get from a savings account based on the market. With a debit card or a checkbook, you can get cash whenever you need it. Continue reading to become an expert in benefits of a money market account and learn everything you can about it.