Money Market Accounts

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.