If you are planning to open a money market savings account, most probably you are a little bit confused with the different rates the banks and credit unions are offering. A comprehensive market search can help you to select the best rates for your investments. There are a number of financial companies offering you such investment. While you compare their rates, it will be good to check out some of the important points such as, the interest rate paid, the minimum balance requirements, other possible fees and services due.
Interest rates are of course the most important issue when considering which institution to work with. Because of the popularity of this kind of account, and the rising competition among the financial institutions, some of the banks play severely and offer much higher interest rates on their money market savings account portfolio. This is of course to attract more customers and to be built a popular name on the market, they offer higher interest rates. All the banks and credit unions offering money market savings account are under the guarantee of another federal authority which means that in the event that the bank or credit union goes out of business, you are guaranteed payment by FDIC or NCUA depending upon having money market savings account with banks or credit unions.
Banks and credit unions may have some requirements regarding the minimum balance to invest. While you search the market for possible companies, check if they have minimum balance requirements. Usually in money market savings accounts the interest rate you receive will be higher depending on your investment. If you are planning to invest an important sum of money for your money market savings account, you can try to bargain the interest rate you receive.
This type of savings account is ideal for investor who have extra cash and does not need the money for some time. If you are planning to invest the money which you may need soon, you should aware of the costs associated with withdrawal. In theory money market savings accounts let you withdraw the money you invested whenever you want, just like a basic savings account. However, generally there are some withdrawal limits in money market savings acccount unlikely to basic saving account. For instance you can withdraw only a certain number of times per month which is usually 3-6 withdrawals. They also expect you to maintain a certain balance in your money market savings account. If not, a small fee is charged by the bank. Another fee can be the fee charged when exceeding the maximum withdrawal amount. The fees and charges can become important in case of frequent withdrawals.
The system behind money market savings account summarizes the motivation of the financial institutions for offering you interest rates for having your money in their banks. They want customers to open money market savings account with them because they want to use this money for loaning to other customers. Banks give you interest rates to motivate you to keep your money in the bank and loan your money to another customer, but with a little bit higher interest rate. So you as the money market savings account holder help the bank to finance lending process to another customer. Banks keep the interest rate differential as their profit margin. Opening a money market savings account is a good way of earning easy cash into your bank account.
