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Understanding Money Market Accounts

Money market accounts are a high interest savings account offered by banks and other financial institutions. Money market accounts offer a higher return than premium savings accounts and require a higher deposit. Funds within money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) and are governed by regulations similar to those regarding savings accounts.

General Money Market Account Information:
When shopping for a money market account, be certain to research and compare interest rates offered by banks, credit unions, and other financial institutions. Many credit unions offer lower fees and sometimes lower initial deposit thresholds. Generally the more money you invest in a money market account, the larger return on your savings. Most financial institutions allow six pre-authorized withdrawals from money market accounts using an ATM card, funds transfer, or check.

Money Market Account Fees:
Most money market accounts incur a monthly service fee which can seriously decrease the value of the interest received on the account. As interest rates tend to fluctuate, choosing a financial institution with the lowest service fees guarantees optimum profits. Many financial institutions require a minimum monthly balance, often described as an "avoid fee," that an investor must maintain to prevent paying a monthly service fee. When selecting the best money market account, be certain to calculate the amount of your investment, ensuring your balance exceeds minimum investment requirements and is above the "avoid fee" threshold.

Online Money Market Accounts:
Online money market accounts often offer lower service fees and incurred account holder expenses. Online money market accounts often allow investors greater advantages as service requirements with most banks and credit unions decrease. Additionally, online money market accounts often have lower deposit thresholds, less fees, decreased charges, better interest rates, and convenient access to your account information and electronic deposit or withdrawal features. As with any online financial transaction, be certain that the financial institution offering money market accounts is FDIC or NCUA insured to reduce the potential risk of online fraud.

Your personal financial circumstances are crucial to choosing the best money market account to meet your needs. Careful research and comparison shopping help to identify and maximize your money market account investment. Also be certain to adhere to and maintain monthly balances as defined by the financial institution to avoid any additional fees which could impact the long term interest yields on your money market account. Choosing a financial institution which offers the best interest rates, quality customer service, and low fees is vital to ensure and increase your money market account investment.

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