Do you wish to open a money market account but don't know how and where to start? Do not worry this article is your single dose of knowledge of money market accounts. We tried our best to provide you with everything you need about money market accounts.
Our team of experts did a lot of research so that we can provide you not only the answers that you are looking for but various other answers that will help you to excel in money market accounts so that you can make better financial decisions according to your needs.
Probably we are sure that you know about these accounts but if you don't then do not worry. We have something for everyone. So why waste any more time let us get started with this article.
What Are Money Market Accounts?
A simple way to understand a money market account is that it is a particular type of savings account with all the features you get in a saving account but with some more beneficial features that will help you to grow money over time. Generally, money market accounts are those deposit accounts that can bear high-interest rates these accounts are generally offered by various banking organizations and some credit unions too.
These accounts are designed in such a way that they contain very low risks along with the liquid investment option which provides high-interest rates in comparison to a savings account. If you want easy access to your saving funds but also looking for higher interest rates so money market accounts are a better option for you considering your needs. But we would like to suggest that you should consult with a financial advisor before saving your money in money market accounts.
The reason behind this is that money market accounts are generally provided by different financial institutions so they vary on various actors such as interest rates, fees, and terms and conditions. Hence it will be a wise decision to compare various money market accounts and choose the one that suits your needs best.
So now we are certain that you understand what money market accounts are let's now understand how these accounts work.
Best Money Market Accounts
Let us focus on the question of the day which is the best money market accounts. We have categorized money market accounts into money market accounts for business and online money market accounts. Let's dig deep to know more about the best money market accounts.
1. Money Market Account for Business
After doing extensive research we found out about the best money market accounts that are available in the market and listed them below.
a) Axos Bank Business Money Market Account
Axos Bank formerly known as the Bank of Internet USA is one of the leading banks in the race of providing money market accounts. They provide these accounts with a lot of perks like low minimum balance requirement, no monthly fees, and competitive interest rates.
One of the most attractive features of Axos bank money market account is that they provide you with various options to access your money like ATM withdrawals, visiting the bank in person, electronic transfers, or in the form who cheques.
b) Chase Business Platinum Money Market Account
Chase is one of the leading financial institutions in the United States which makes them a trustworthy organization for all your financial needs. They have a huge network of ATMs which allow easy access to the funds that are saved by the customers.
Chase Bank is known for providing high-end customer services to their customers. They have a convenient physical presence in the market. If you're looking for a bank where you can get easy access to your money then chase bank is for you.
c) CIT Bank Business Money Market Account
The CIT bank is known for providing high-interest rates to their customers. Another premium feature that you get in CIT bank is that you don't have to pay any monthly fees, sounds good right? This bank is also known for providing easy online access to its customers.
Despite having a requirement for a high minimum balance this bank is still very popular among people these days because of the perks that are provided in their money market accounts.
2. Online Money Market Accounts
If you want to stay away from public places and want a financial institution that provides a good money market account then this list is handcrafted for you.
a) Ally Bank Money Market Account
Ally Bank is known for providing high-interest rates to their customers along with no maintenance fees at low which makes it a leader in this list. One of the most friendly features of this online platform is that they provide 24/7 customer support.
One of the best features that we found about this bank is that you can access your money in a money market account by various means such as electronic transfers, or in the form who cheques.
b) Synchrony Bank Money Market Account
Synchrony Bank is one of the leading financial institutions in the United States which makes them a trustworthy organization for all your financial needs. They have a huge network of ATMs which allow easy access to the funds that are saved by the customers.
Synchrony Bank is known for providing high-end customer services as well as high-interest rates to its customers. They have a convenient physical presence in the market. If you're looking for a bank where you can get easy access to your money then chase bank is for you.
c) Discover Bank Money Market Account
Discover Bank is known for providing high-interest rates to their customers. Another premium feature that you get in Discover Bank is that you don't have to pay any monthly fees, sounds good right? This bank is also known for providing easy online access to its customers. Discover Bank has a high-performance app that provides 24/7 customer support.
How Do Money Market Accounts Work?
Honestly speaking there is not a big difference between savings and money market accounts which makes it easier for anyone to understand about these accounts. Let us now look at how a money market account works:
1. Interest-Earning
Generally when you open a money market account what you do is that you deposit your money into your account which allows the bank to use that as funds. Then these financial institutions use your funds to make investments in diversified markets to earn profits.
They make investments in various markets such as certificates of deposit (CDs), short-term government securities, and various other low-risk financial institutions. The interest rates from these organizations were later provided to the respective account holders in the form of interest.
2. Interest Rates
These accounts generally offer higher interest rates as compared to the savings account. This is because the bank or financial institution uses your money to make various investments which in turn provides the bank or financial institution with more money hence they are allowed to give higher interest rates.
Though the exact interest rates may vary from bank to bank. Not only on the banks one of the major factors that determines the interest rates are market conditions and the type of investment made by the bank or financial institution.
Through our extensive research, we found out that credit unions as well as online banks generally provide higher interest rates in comparison to physical banks.
3. Liquidity
One of the best features of money market accounts is that they are designed in such a way that it makes these accounts liquid. By liquid, we mean to justify that a person who has deposited money in these accounts can easily access the account and withdraw money according to needs.
Though there will be restrictions on the number of withdrawals that a person is allowed to make. This generally depends on the banks but mostly banks limited the number of transactions to six. As same a savings account, you can access your money in a money market account by various means such as ATM withdrawals, visiting the bank in person, electronic transfers, or in the form who cheques.
4. Safety
This is one of the plus points of money market accounts. As we know by now that these accounts are offered by well-established banks as well as credit unions which are federally secured by the FDIC (Federal Deposit Insurance Corporation) in the United States. And the credit unions are federally secured by NCUA (National Credit Union Administration).
Since these banks and credit unions are secured by such reputed government organizations so they provide insurance if the bank or credit union goes bankrupt. As of now, the protection money is $250,000 per depositor per institution.
5. Minimum Balance and Fees
One of the distinguishing features of these accounts is that they require a minimum account balance so that they can use that to cut the monthly maintenance fees. Through our extensive research, we have found out that the minimum amount balance depends on the banks and respective credit unions.
Here we would like to suggest that you should carefully review the terms and conditions of the banks in which you want to establish your money market account so that in future you can save yourself from indulging in any kind of false activity.
Read Also:- 10 Most Premium Credit Cards in the World (With Perks and Benefits)
This is all that you need to know about the working of money market accounts. let us move to the further section of our article where we will be discussing the pros and cons of these accounts.
Pros and Cons of Money Market Accounts
Money market accounts have both disadvantages as well as advantages. It will depend on you how these advantages or disadvantages will affect you in the near future.
Pros
- Generally, these accounts provide you with high-interest rates in comparison to the savings account which means they have the potential to provide you more money than the savings account. These accounts are very safe because they are backed up by FDIC or NCUA which ensures that your money is safe.
- As of now, the protection money is $250,000 per depositor per institution. One of the best features of money market accounts is that they are designed in such a way that it makes these accounts liquid. Though there will be restrictions on the number of withdrawals that a person is allowed to make. This generally depends on the banks but mostly banks limited the number of transactions to six.
- They make investments in various markets such as certificates of deposit (CDs), short-term government securities, and various other low-risk financial institutions. Due smart and conservative approach toward investing allows money market account holders to maximize their savings.
- As we said before most banks limited the number of transactions to six. As same a savings account, you can access your money in a money market account by various means such as ATM withdrawals, visiting the bank in person, electronic transfers, or in the form who cheques.
- One of the distinguishing features of these accounts is that they are diversified which makes the risk comparatively low and increase the interest rates. This will help you to establish and achieve your short-term financial goals as well as it helps you to build emergency funds.
Cons
- Since we all know that the money market accounts for higher interest rates as compared to the regular savings account but the return is comparatively lower than various investment options like bonds and stocks moreover inflation can seriously affect the purchasing power of money that you have saved in accounts.
- As we said earlier these money market accounts require a minimum account balance so that they can use that to cut the monthly maintenance fees. Through our extensive research, we have found out that the minimum amount balance depends on the banks and respective credit unions.
- There is a restriction on the number of withdrawals that a person is allowed to make. This generally depends on the banks but mostly banks limited the number of transactions to six. If anyone exceeded the limit then that person has to pay a fine which is generally based on that bank.
- Saving your money in a money market account can potentially cost you an opportunity to invest in high-risk and high-return investment options like bonds and stocks. This means you can potentially miss a high-return opportunity that may cost you your financial goals.
- The biggest competitor for physical banks which provide money market accounts is mostly online banks which provide the same service but with more higher returns than the physical banks. Another drawback of these accounts is that they have a lot of fees associated with them like transaction fees, excess withdrawal fees, and monthly maintenance fees which can lower your income.
Read Also:- Best Ways to Improve Credit Fast
Hope you understand the money market accounts by now. We are sure that now you can choose what type of account is made for you. But wait we have more for you. Let us now look at some of the best money market accounts for businesses that are available in the market.
Frequently Asked Questions (FAQs)
Q1. What Is a Money Market Account?
A1. Money market accounts are those deposit accounts that can bear high-interest rates these accounts are generally offered by various banking organizations and some credit unions too.
These accounts are designed in such a way that they contain very low risks along with the liquid investment option which provides high-interest rates in comparison to a savings account.
Q2. Which Is Better Money Market Account or Savings Account?
A2. The answer to this question depends on your financial needs ad your financial goals. These accounts are designed to meet different needs so we suggest that you should do extensive research according to your needs and find out yourself which accounts suit you best.
Q3. Which Bank Offers the Best Money Market Accounts?
A3. There are various banks that provide money market accounts. We have listed some of the best accounts that are available in the market but in the end, it depends on you which money market account from which financial institution will suit you according to your needs and financial goals.
Wrapping Up!
We are extremely glad to see you at the end of the article. Our team of experts did a lot of research to frame this article according to your needs and guess what we will keep on updating this article from time to time so we would like to suggest that you should bookmark this article for your further needs.
In conclusion, a simple way to understand a money market account is that it is a particular type of savings account with all the features you get in a saving account but with some more beneficial features that will help you to grow money over time.
Generally, money market accounts are those deposit accounts that can bear high-interest rates these accounts are generally offered by various banking organizations and some credit unions too. These accounts are designed in such a way that they contain very low risks along with the liquid investment option which provides high-interest rates in comparison to a savings account.
As we said before most banks limited the number of transactions to six. As same a savings account, you can access your money in a money market account by various means such as ATM withdrawals, visiting the bank in person, electronic transfers, or in the form who cheques.
We hope that you like this article. If you like this article then we request you to forward this article to the people in need whether they are your friends or family or your co-workers.
