Money Market Accounts: What You Need to Know
Thinking about opening a money market account to help you achieve your financial goals? A money market account can help you save money and reach your personal finance goals by earning interest or dividends on your savings.
Money market accounts are great for people looking to earn interest on their finances and have easy access to their funds. At Arkansas Federal Credit Union, we offer money market accounts that allow for easy cash access and earn based on tiered dividend rates. The more you save, the more you can earn with your Arkansas Federal money market savings account.
But before you decide that you should open a money market account, it’s important to have a full understanding of what you’re getting and how a money market account can help you towards your financial goals.
What Is a Money Market Account?
A money market account is an interest-bearing account through a bank or credit union. In simplest terms, a money market account is a type of savings account, allowing you access to cash as you may need with six free withdrawals per month.
At Arkansas Federal, we offer tiered dividend rates that increase as your balance in your account increases. You can check our current rates to see how much you can earn with one of our money market savings accounts.
How Money Market Accounts Work
Money market accounts are usually offered at your financial institution or credit union and may require a deposit to open one.
When you’re choosing a money marketing account through a financial institution, it’s important to consider all of the benefits it offers. A personal money market account has some pros and cons that may impact your decision. Some of the benefits include:
- Higher interest or dividend rates
- Insured accounts
- Easy access to funds in case of emergencies
Many money market users may find that having a money market account provides them with funds that are easy to access and offer higher rates than other savings accounts. Additionally, credit union money market accounts are insured by the National Credit Union Administration (NCUA) up to $250,000 per account holder, helping to protect your deposits.
Money market account holders also have the benefit of having access to the cash in their money market account when they need it.
Although there are many advantages to having a money market account, there are some things to consider:
- High minimum balance requirements
- Fees for over six withdrawals per month
- Variable interest or dividend rates
Because of the high minimum balance requirement, a money market account is a good option to consider after you’ve built up traditional checking and savings account balances for your everyday expenses and savings.
Money Market Account vs Savings Account
Money market accounts are different from a regular savings account, specifically due to their higher earning rates and account features. A money market savings account may be primarily used as a type of savings account.
Money Market vs Checking Account
Although money market accounts and checking accounts have some similarities, there are differences between a traditional checking account and a money market savings account. For example, federal regulations limit the number of transactions you can do for free per month with a money market account, where most standard checking accounts don’t.
Some credit unions, like Arkansas Federal, charge an additional fee for withdrawals past the federal limit of 6 per month, so using a money market account for regular withdrawals or daily use isn’t ideal. Instead, a checking account is much better suited for regular transactions.
How to Set up a Money Market Account
If you’re interested in setting up a money market account, it is important to pick the right financial institution or credit union for you. Compare different rates and benefits that each place offers before opening an account to ensure that you’re getting the most out of your finances.
- Initial deposit amount
- Extra fees or penalties
- Special incentives
It’s important to also note that most money market savings account fees and penalties are at the discretion of the financial institution and are not set in place by banking Regulations. Penalties and fees will vary depending on the banking institution.
Money market accounts can be a great way to help you meet your long-term financial goal but they are not always practical for every consumer. However, if you are looking to save money in the long-term while making a bigger return on investment, a money market account might be right for you over a traditional savings account.
Where to Get a Money Market Account
Money market accounts can be found at your local bank or credit union. At Arkansas Federal Credit Union, we provide our customers with easy access to their money market accounts, competitive rates, and predictable returns. We also work to ensure their accounts are safe and secure to use with digital banking features.
Think a money market account with Arkansas Federal is right for you? Open an account and become a member today!
Read The Difference Between Checking and Savings Accounts
Read Best Places to Store Your Savings
Read How to Get the Most out of Your Checking Account