Money Market rates are much higher than standard checking account interest rates, and close to 1 year CD rates.

When you put your money into a money market savings account it earns interest just like in a regular savings account.

A money market account is a type of savings account offered by banks and credit unions just like regular savings accounts. The difference is that they usually pay higher interest, have higher minimum balance requirements (sometimes $1000-$ 2500), and only allow three to six withdrawals per month. Another difference is that, similar to a checking account, many money market accounts will let you write up to three checks each month.

With bank accounts, the money in a money market account is insured by the Federal Deposit Insurance Corporation (FDIC), which means that even if the bank or credit union goes out of business, your money will still be there. The FDIC is an independent agency of the federal government that was created in 1933 because thousands of banks had failed in the 1920s and early 1930s. Not a single person has lost money in a bank or credit union that was insured by the FDIC since it began. With credit unions, the money in a money market account is insured by the National Credit Union Administration (NCUA), a federal agency.

“With a sinking and volatile stock market, you’re seeing many consumers flock to money market deposit accounts,” says David Barr, a spokesman for the Federal Deposit Insurance Corp. in Washington. This is largely due to FDIC insurance currently covering depositors up to $250,000. That is a protection that is not generally available to holders of stocks, bonds or money market mutual funds.

“If you are now afraid of the stock market, and you don’t have the money to lose, a money market deposit account is what you should consider,” says Deborah Pavelka, a professor of accounting at Roosevelt University in Chicago.

How Money Market Accounts Fit into Your Financial Portfolio

In general, MMAs restrict the number of withdrawals, experts explain. “But what they don’t have is the maturity date of a [certificate of deposit],” Barr adds.

An MMA, when linked to a checking account at your current bank, can help you earn more interest on funds that would normally sit in low- or no-interest checking accounts. When you need cash in your checking account, you can transfer from one account to the other. If you’re banking online, transferring funds is as easy as logging in online.

Because they fill a niche between a standard savings deposit account and a certificate of deposit (CD), most MMAs offer interest rates that are slightly higher than a savings account but with greater access to your funds than a CD would offer.

“So you have a product that offers a higher interest rate than a savings account but more flexibility than a CD,” Barr says.

As a result, an MMA can be extremely attractive to those consumers who may only need to dip into their reserves a couple times a month, experts add. Overall, it is a simple and secure way to invest your funds.

“The deposit rates today [on MMAs] are very competitive,” Barr says.

Some of the best rates are available from online banks that pass on savings to customers from their smaller brick-and-mortar operations. Many online money market accounts also offer perks, such as check-writing privileges, debit cards and fewer fees, Pavelka says.  While some consumers may be driven to the best rates an MMA offers, others may be interested in convenience, such as a variety of withdrawal methods and live customer service. Barr advises, “Also, look for any fees that may be attached to a money market deposit account.”

As of today, October 18 2010, the national average for money market account rates is 0.33% APY.  But it pays to shop around on sites like RateNerd to find higher money market interest rates.  For example, Discover Bank offers interest rates that are consistently above the national average (1.20% APY as of October 19, 2010 – click here for today’s current money market account rate).  Discover also offers  fee-free higher rates for higher balances and daily (versus monthly) compounding, fee-free ACH transfers, automatic bill pay, ATM withdrawals, the option to have a debit card and even person-to-person transfers.

“A money market deposit account can serve as a holding tank for your money while you wait for the stock market to stabilize,” Pavelka says. “But depending on the perks, a money market deposit account can also serve as your primary checking account.”

Security of Money Market Accounts: FDIC and NCUA Insurance Protection

MMAs offer the advantage of FDIC insurance, Barr says. With the passing of federal bailout legislation by Congress in fall 2008, individual MMAs are now protected up to $250,000 while joint accounts are covered to twice that amount.


“These accounts can offer significant insurance levels and my suggestion is that consumers visit the FDIC Web site (www.fdic.gov) to see how much protection can be available for joint accounts,” Pavelka says. The site provides consumers with the most current FDIC insurance limits and demonstrates how joint accounts and accounts with named beneficiaries enjoy higher coverage levels.

Why Money Market Accounts Make Sense Now is a post from: RateNerd - unadvertised deals from banks.

                          

Make sure you understand the basics of CD and Money Market Accounts.

Lately, anyone who’s been watching the stock market or reading the headlines may be asking themselves, “So where’s the safest place for me to save my money?”

Stashing your cash in your mattress may seem like the simplest and safest solution. But the money in your mattress isn’t protected by the Federal Deposit Insurance Corporation (FDIC) the way that bank deposit accounts are.

FDIC-insured bank deposit accounts are a safe way to protect your assets-while you grow your savings. And there are some great rates and high-yield accounts out there to help maximize your savings.

Whether your financial strategy is primarily a savings account you opened in high school-or you’re rebalancing a high-risk portfolio-FDIC insured bank deposit accounts can be an important part of your overall financial savings planning. What types of bank accounts are FDIC insured?

There are 4 types of bank deposit accounts.

If you’re looking for low risk and high yield investments, checking, savings, Money market deposit accounts and CDs are popular types of FDIC-insured bank deposit accounts.

These bank deposit accounts are insured for up to $250,000 for each depositor per institution.

Non-FDIC insured investment accounts include mutual funds, annuities, life insurance policies, stocks and bonds. These investments have generally higher risk than traditional deposit products-which means you could lose some of the money you invested or not gain as much profit as you expected, states the FDIC.

First, start with a goal in mind with an investment strategy

It’s important to have a clear understanding of what you are saving for. The shorter your investment horizon, the more liquid the investment should be.

Will you need ready access to your funds and move funds quickly? Then a shorter term CD may suit you best. Consider a 6-month CD or 12-month bank CD that you can quickly convert to cash.

If you’re saving for a car or that dream vacation, you may want to leave these funds untouched for a few years. In that case, putting your money in a 2-year certificate of deposit makes sense.

If you’re able to lock in your money for a longer time-a 5-year bank CD with a higher yield and longer term may suit you best.

If your goal is to save for retirement consider a longer term CD offering the highest interest rate, such as a 7-year CD or a 10-year IRA retirement CD. You can find high yield investments for both Roth IRA CDs as well as Traditional IRA CDs.  You can check CD rates from Discover Bank here, or check the CD rate tables at RateNerd.com.

Your investment strategy will depend on your goal, the length of time you hold your investments and where you put your money. Once you are clear on what you’re saving for and how soon you will need your money, you’ll have a better idea of what types of investments are best for you.

Figure out how much you need to save to reach your goal and how much you can save each month toward that amount. “Laddering” your CDs can help you optimize both cash liquidity and interest. For example, you may consider putting part of your funds in a 6-month CD, another amount in 12-month CD, a 2-year CD, 3-year CD, 4-year CD and finally a 5-year CD. In effect, laddering your investment from short to long term. As time goes by and your CDs mature, you then reinvest them in a longer-term, high yield CD.

Understand the basics of Money Market Accounts – Higher rates for higher balances

Money Market Accounts are great ways to invest money for the short-term. If you need a quick turnaround, these are stable ways to secure a return on your investment.

Money Market Accounts (not to be confused with money market funds) are simple, flexible and secure. Most money market accounts provide higher interest rates than a savings account-with greater access to your funds than a CD.

Money Market Accounts will earn about twice the interest of a savings account, according to Bankrate.com4. A minimum balance is usually required, which may be more than a savings account requires.

A Money Market Account works like a checking account with a variable rate. When you need cash, you can quickly transfer funds without penalty. You can access your money using a bank debit card, check, wire transfer, online transfer of funds-and even arrange free bill payment from your money market account.

You can deposit money as you’re able and can also set up automatic transfers to your money market account from a checking or savings account.

If you only need to dip into your account a few times a month, a Money Market Account with a competitive rate may be the best investment for you.

Money Market Accounts are a simple way to save. Best of all, there’s no market risk-the money you deposit will never decrease in value.

Know how Certificate of Deposits (CDs) work – Rates increase as the term length increases

A CD is a low-risk bank deposit account with fixed interest rates that increase the longer the term of the CD. You purchase a CD for a specified length of time-from three months to several years-and the bank guarantees you a fixed return. These returns are usually substantially more than what you could earn with a checking or savings account.

The bank pays you interest periodically and when you redeem your CD you receive your principal plus accrued interest. If you need a dependable return on your money, but don’t need to tap into your money for a specific period of time, consider a certificate of deposit.

Make sure you understand the terms-and the penalties for withdrawing your money before the CD maturity date.

Look for the best bank ratings and find a safe haven for your money

In addition to looking at the low risk and high returns of bank deposit accounts, check out the bank rating. Moody’s, S&P and Bankrate.com offer ratings of a bank’s financial strength and performance. Look for the best bank rating available (AAA rated or 5 star), which indicates a strong bank that’s a safe haven for your money.

Now that you have a basic understanding of two types of FDIC-insured bank deposit accounts, you’re ready to put your money to work for you in a high yield deposit account with a top rated bank.

Money Market and CD bank deposit accounts are a very simple-and very secure way-to save. Be sure you know the different types of accounts available, the pros and cons of each type, how easily you can access your funds in case you have cash flow problems (the liquidity), and the terms and fees involved.

Some other questions to consider when shopping for Money Market or CD accounts:

• What types of bank deposits accounts are offered?
• Where can I get the best rates?
• How long do I want to invest this money?
• What are the transaction limits?
• When is the interest credited?
• What are the terms?
• What services are offered?
• What is the minimum investment/balance?
• How easy is it for me to bank there?

TIP: Most people who open a financial account online are having that experience for the very first time. If you’re just starting out, get information on how to budget in tough times and find helpful tips on saving for today, tomorrow and beyond.

TIP: FDIC-insured deposit accounts include: Checking and Money Market Accounts, savings accounts including passbook accounts and Certificates of Deposit (CDs).

Non FDIC insured investments include mutual funds (stock, bond or money market mutual funds), annuities, stocks, bonds and Treasury securities. Source: FDIC.gov

How To Use CD’s and Money Market Accounts Now is a post from: RateNerd - unadvertised deals from banks.

                          

It used to be that banks were considered safe places to put your money, and we never paid attention to the FDIC insurance signs in front of each teller.

But today you had better be certain that your savings, money markets, certificates of deposit and other assets are backed by the FDIC.

What is the FDIC?

The Federal Deposit Insurance Agency (FDIC) is an independent agency of the U.S. government that protects or insures depositors from losses if a bank fails. Deposits at FDIC-insured institutions are insured up to at least $250,000 per depositor until December 31, 2009. On January 1, 2010, FDIC deposit insurance for all deposit accounts-except for certain retirement accounts-will return to at least $100,000 per depositor. Insurance coverage for certain retirement accounts, which include all IRA deposit accounts, was increased permanently to $250,000 per depositor in 2006.

What is covered by FDIC insurance?

The FDIC insures most traditional types of bank accounts – checking, savings, trust, certificates of deposit (CDs), IRA retirement accounts and money market deposit accounts. All of these types of accounts generally are insured by the FDIC up to the legal limit of $250,000 and sometimes even more for special kinds of accounts or ownership categories.  The key word here is “deposits” – that’s what the FDIC insures.

What is not covered by FDIC insurance?

As banks and other financial institutions have expanded their offerings to include a broad array of investment products that are not deposits, such as mutual funds, annuities, life insurance policies, stocks and bonds. Unlike the traditional checking or savings account, however, these non-deposit investment products are not insured by the FDIC.  Here are some of the more common ones:

• Mutual Funds. You may be invested in a money market mutual fund, which may invest in short-term CDs or securities such as Treasury bills and government or corporate bonds. Do not confuse a money market mutual fund with an FDIC-insured money market deposit account, which earns interest in an amount determined by, and paid by, the financial institution where your funds are deposited. The key point to remember about mutual funds, stocks, bonds or other investment products, whether at a bank or elsewhere, is that these funds are NOT deposits, and therefore are NOT insured by the FDIC – or any other agency of the federal government.
• Treasury Securities. Even though Treasury securities are not covered by federal deposit insurance, payments of interest and principal (including redemption proceeds) on those securities that are deposited to an investor’s deposit account at an insured depository institution ARE covered by FDIC insurance up to the $250,000 limit. There is no federal insurance on Treasury securities, though they are backed by the full faith and credit of the United States Government.
• Safe Deposit Boxes. The contents of a safe deposit box are not insured by the FDIC. In the event of a bank failure, in most cases the acquiring institution would take over the failed bank’s offices, including locations with safe deposit boxes. If no acquirer can be found the FDIC would send boxholders instructions on how to remove the contents of their boxes.
• Annuities. These are underwritten by insurance companies, and sold at some banks.  Not FDIC insured.
• Stocks, bonds, Treasury securities or other investment products. Whether purchased through a bank or a broker/dealer, they are not FDIC insured.

For More Information about the FDIC

Call toll-free at 1-877-ASK-FDIC (1-877-275-3342) from 8 a.m. until 8 p.m. Eastern Time, Monday through Friday.

For TDD call 1-800-925-4618.

Calculate your insurance coverage on-line using the FDIC’s Electronic Deposit Insurance Estimator at: www2.fdic.gov/edie

Request a copy of “Your Insured Deposits,” which provides a detailed discussion on all the ownership categories, or by calling toll free 1-877-275-3342.
Read more about FDIC insurance on-line at: www.fdic.gov/deposit/deposits/index.html

Send your questions by e-mail using the FDIC’s on-line Customer Assistance Form at: www2.fdic.gov/starsmail

Mail your question to:
FDIC
Attn: Deposit Insurance Outreach
550 17th Street, N.W.
Washington, DC 20429-9990

Do You Know If Your Money Is FDIC Insured? is a post from: RateNerd - unadvertised deals from banks.

                          

There are numerous ways for an individual to invest his or her money and it is important for each person to choose the investments that are right for them. Examining the different options will help you as an individual choose the best course of action for your investment decisions.

A money market account (MMA) will give you a higher interest rate than a regular savings account. The idea behind a money market account is that you will agree to maintain a certain minimum balance in the account at all times and as a result you will get a higher interest rate. There is usually a limit on the number of checks you can write and the number of withdrawals you may make each month.

The advantages of a money market account are a higher interest rate than checking accounts and more liquidity than CDs. Due to the requirement to maintain a minimum balance, the bank is willing to provide higher interest rates. The ability to write checks from your money market account makes it easier for you to get your money out. Also, because banks make the money market accounts available, the FDIC may insure them.

However the liquidity advantage over CDs comes at the cost of lower interest rates. In addition, if you fall below your minimum balance requirements, write too many checks, or make too many withdrawals, you can face some penalties in the form of fees.

Money Market Accounts is a post from: RateNerd - unadvertised deals from banks.