There’s never a bad time to start saving money, but sometimes the payoff is bigger than others. One of those times is when the Federal Reserve starts hiking interest rates – something it has been doing in 2022 to help ease inflation. When the Fed raises its benchmark rate, banks often raise the interest rates...
A money market account offers several benefits unmatched by traditional savings accounts or other deposit products. In fact, a money market account takes many of the advantages of a savings account and a certificate of deposit, combining them into a completely unique deposit account with some of the best interest rates. Of course, opening a money market account isn't the right option for everyone, so read on to find out how money markets work and how you can use them to your advantage.
Money market accounts are deposit accounts that allow you to earn slightly higher rates than traditional savings accounts tend to offer, but with a few more restrictions. Typically, a money market requires that you maintain a minimum balance of anywhere from a few hundred dollars to several thousand. Often, the higher the minimum balance, the higher the interest rate offered on the account.
Additionally, there are usually restrictions on the number of withdrawals you can make from a money market account. Some only allow a few withdrawals each month, other accounts place limitations on the number of withdrawals per quarter.
These qualities are what make money market accounts a lot like a savings account/CD hybrid - time restrictions allow you to earn a higher money market interest rate, but there is still liquidity to your funds.
Because one of the biggest benefits of a money market account is the ability to earn a higher interest rate, it's important to ensure you really are receiving a competitive rate on your account. Not all banks and credit unions offer the same money market rates, so it's up to you to compare offers from a variety of institutions and see who can provide you the best money market account terms and rates.
Money market accounts are best for depositors who have quite a bit of savings to invest and don't need daily access to that money. If your top concern is maximizing your savings with the best money market rates available today, but you still want to maintain some liquidity, this type of account may be perfect for you.