Money Market Accounts
Money market accounts are similar to savings accounts offered by banks and other financial institutions, but which generally require a higher level of deposit – for which the banks pay higher rates of interest. Funds deposited into money market accounts are protected by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) to insure that there is no risk of investors losing their funds.
High Interest Money Market Accounts
The more money you have to invest in money market accounts, the higher the return you will be able to get on your savings. Shopping for money market accounts, rather than accepting the ones offered by your local bank, can often lead you to high yield money market accounts. Money market accounts offered by credit unions for example, may offer the best interest rates on money market accounts together with a lower fee structure or deposit threshold.
All money market accounts are governed by the same regulations that apply to savings accounts. Therefore, even when you have substantial funds invested in money market accounts, you are still allowed to make up to six “pre-authorized” withdrawals from a money market account using either an ATM card or check facility where provided.
Online Money Market Accounts
Online money market accounts can provide even greater advantages to the investor. As banks and credit unions providing online money market accounts have lower costs, they are often able to advertise the best rates on money market accounts with lower deposit thresholds and less fees and charges.
Online money market accounts can also offer you the convenience of making further deposits online when you have excess funds to invest, or electronic withdrawals back into your checking account when you need to access your funds. Because of the potential risk of online fraud, it is always in your best interests to ensure that the financial institutions offering money market accounts are FDIC or NCUA regulated.
Fees for Money Market Accounts
Many money market accounts have a monthly service fee attached to them which can seriously reduce the value of the interest received – especially at times when interest rates are low. Some financial institutions advertise an “avoid fee” figure, which represents the balance that an investor must maintain if they are to avoid paying the monthly service fee.
Therefore, when considering which the best money market accounts are to invest in, you should calculate whether the amount you have to invest not only exceeds the minimum investment level of the money market account, but also is above the “avoid fee” threshold.
Money Market Accounts Summary
Calculating which the best money market accounts are for your investment can involve a little head scratching. Not only do you have to consider who is paying the best interest rates on money market accounts, but what monthly service fees are deducted from your return on investment and if they can be avoided by maintaining an account balance above a certain limit.
Other key points to consider are the accessibility of your funds and the customer service that is provided by the financial institution offering the money market account facility. This final area might be of particular importance to you if you are not familiar with online money market accounts, and need occasional assistance in completing transactions over the Internet.
Only you can judge what the best money market accounts are in respect of your personal financial circumstances. If you take time to identify the best money market accounts, your efforts will be justified by the additional financial rewards you witness in your money market account.