A money market deposit account is a special kind of account offered by many banks and other financial institutions. It’s sort of a hybrid between a checking account and a savings account. Banks offer them because they are not allowed to offer interest on checking accounts. So, they created money market deposit accounts, which have a set number of transactions that can be performed every month, but also offer higher interest rates than savings accounts. A typical savings account will offer interest on your average daily balance, but it’s usually not too high. Let’s put it this way – there are better ways to save your money AND make even more money on it. A money market deposit is one such way.
A money market deposit account will get you significantly better interest rates than a plain old savings account, but you will be required to keep a higher daily balance, and make bigger deposits. There are other strings attached to a money market deposit account as well, such as a limited number of transactions allowed. That means you can only write so many checks, usually on a per-month basis. If you go beyond that number of permissible transactions per month you will end up paying an unpleasantly high penalty fee – ouch! The good news is banks now offer ATM cards to go with your money market deposit account, so things will be that much more convenient. So, if you have a chunk of cash sitting around that you know you’re not going to touch for a long time, you will be safe with a money market deposit. The same goes for your deposits – since you’ll need to make larger-than-average deposits (usually a set figure) you will need to have income coming in to meet that requirement. In most instances, a money market deposit account will pay the daily, fluctuating interest rate set by the markets.
Money market deposit accounts are a prudent way to increase your financial security. Before you put your money into one, it’s crucial that you sit down with a qualified financial expert from the banking industry and go over all your options. He or she should be able to answer any and all of your questions.