These days, many Americans find themselves with a surplus of cash in their checking accounts due to reduced expenses, stimulus payments and more.
While keeping money in checking accounts is much safer than stashing cash around the house, there is another great way to save your extra cash – a money market account – safely with access as easy as your checking account.
What is a Money Market Account?
A money market account allows you to take your cash and earn interest on it over any period of time, basically investing your money to earn interest versus relying on a long haul investment like real estate or a retirement fund.
Because the assets in a money market account are considered liquid, you can manage your money market account’s deposits and withdrawals using direct access with no penalties for early withdrawals like some other investment accounts.
How Do I Manage a Money Market Account?
Managing a money market account is as easy as managing a checking or traditional savings account. When you open a money market, you’ll receive a debit card and online and mobile access. If you link the money market to your checking account, you can quickly transfer funds between both accounts.
Money market accounts also have no limit on the number of deposits you can make per month, allowing you to continuously add funds through direct transfers and on those occasions you have over budgeted and have surplus cash to save.
Keep in mind, however, that Federal regulations limit you to no more than six preauthorized withdrawals, automatic or telephonic transfers, checks, drafts, and debit card or other similar transactions from your account per month or statement cycle.
How is a Money Market Different from Regular Savings?
Money markets can offer higher interest rates than traditional savings accounts, with the same level of flexibility.
Opening and monthly balance requirements vary by financial institution and by product type, such as a high yield money market account, compared to traditional savings accounts, so check with your bank to see what rates are available for both types of accounts and which is the best fit for you.
The most important thing is that you are saving!
Are Money Market Accounts Safe?
First, it is important to distinguish a money market account from a money market fund. While they seem similar by name, they are very different products.
A money market fund puts your money into investments like mutual funds, which carry low risk but are not FDIC insured.
Like traditional savings accounts, money market accounts are FDIC insured up to $250,000 to protect your money. And because it is a savings account tied to interest rates, and not to the value of specific stocks or investment funds, your money will continue to safely grow and earn for you without the worry of it losing money – all with the easy accessibility you may need for an emergency, a vacation, or a large purchase.
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