Much like a regular savings account, a Money Market savings account earns a matching rate of interest dependent on the amount of the deposit. The only variance is that the bank utilizes your capital and loans it to additional individuals with a elevated interest rate. The interest generated from money markets rates are compounded daily and paid every month with rates based on the going rate of the bank at the time the transaction was made. Depositors should be mindful regarding the existing interest rates prior to placing their capital on money market investments as these rates vary over time.

BANKER’S ACCEPTANCE. It is a transferable instrument or bill of exchange withdrawn and accepted by a bank. It acts much like a postdated check that is paid to to the bank by the bank’s customer to pay a sum total of funds at a specific period of time, typically inside a 6 month period of time. Acceptance of this draft allows the bank to trade or sell it in secondary markets. International trade relies on Banker’s Acceptance. For instance, an importer may want financing from an exporter. The importer may use a Banker’s Acceptance from his bank to complete transactions in the bank’s behalf; he then issues a time draft on the bank as his promise to pay. The bank discounts this draft and pays the importer an amount less than the original draft. The importer uses the said total to pay the exporter. It is now the bank’s discretion to utilize this draft either to their collection or to resell or rediscount it in the secondary market.

TREASURY BILLS. The most popular market security are T-bills. T-bills are issued for 3-month, 6-month and one-year periods. T-bills are traded competitively or non-competitively. Non-competitive means you cannot propose for the amount of security that you will receive other than what is stated at the time of the auction. In contrast, competitive bidding presents more versatility because you may bid more than the specified returns. If they find your offer too much, they may deny you of the T-bills or they may still carry on with the offer but only present you with a portion of what you bid for.

T-bills are marketable because they appeal to the general individual investors. Other kinds of money market investments aren’t as reasonably priced. T-Bills are as a rule issued in denominations of $1,000, $5,000, $10,000, $25,000, $50,000, $100,000 and $1 million. An additional feature that makes T-bills saleable is because of its brief maturity. A T-bill may be purchased for as short a term as four weeks. But the downside to this is that your cash is tied up for the 4-week time frame with no opportunity to extract it before maturity as with CDs.

$1000 increments are obtainable for purchase. Denominations greater than a thousand won’t be given and has to be invested in other money market type accounts.