With money market accounts, you can earn considerably more interest than you can with savings accounts. In order to afford to be able to guarantee the favorable rates associated with money market accounts though, banks impose high minimum balances, and strict limitations on the frequency of allowable withdrawals.
Where does you money go?
The rationale for the minimum balance, is that banks take your money and invest it on very conservative investments like government bonds, some securities and even in CDs, or other accounts with favorable interest rates. To do this, your bank needs for you to give some guarantee that your money is there for the long haul, and that you won’t just suddenly pull it out. That guarantee is your minimum balance.
The best rates on money market accounts are often from online banks such as Everbank. Some online banks even offer money market accounts with more lenient liquidity restrictions.
Rules for money market accounts
The typical limit for withdrawal from a money market account is six times per month. This includes automatic payments set up with you money market account, as well as electronic debits made with the debit card which is offered with some money market accounts.
There is such a thing as a high-yield money market account which earns even greater interest; however these require even higher minimum deposits, and are even more limited in terms of allowable withdrawals.
Earn more With Money Market Accounts
If you have a lot of idle cash, money market accounts are a much smarter investment than traditional savings accounts. Just make sure that when you do pick a money market account to invest in, that you take the time to find out what the best available interest rates are.
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