Bank money market accounts allow account holders to earn higher yields then traditional savings accounts. These investments are also backed by the Federal Deposit Insurance Corporation (FDIC), making them a safe place to stash cash.
Maximize Money Market Yields
Money market accounts give investors the ability to earn higher yields on their savings. However, rates offered by financial institutions can vary. Investors can maximize their money market yields by checking out online comparison tools (such as Bankrate.com). These companies allow investors to compare bank money market rates across the country.
Financial institutions also publish current rates on their websites. Investors who prefer to do business with specific financial institutions can shop rates online before making a final decision.
Watch Out for Fees
Bank money market accounts may have fees. Over time, these fees can add up and can make a decent impact on the account holder’s earnings. When shopping for a bank money market account, pay attention to withdrawal limit fees. After exceeding the allowed number of withdrawals each month, the financial institution may charge a fee. This could be as high as several dollars per additional withdrawal.
Also, watch out for minimum balance fees. Since bank money market accounts pay higher interest rates then traditional savings accounts, they might penalize account holders for dropping below a certain balance.
For example, if the account has a minimum balance of $5,000, the account holder might get charged an additional $15 a month for not keeping the minimum monthly balance. Comparing these investment money market fees before choosing an account will help the investor save money in the long-term.
Tiered Rates of Return
Some bank money market accounts are offering tiered rates of return. This means, the more the investor saves, the higher interest rate they earn. For example, if the account balance grows to $100,000, the account holder will earn higher returns on their investment dollars.
In addition to tiered rates of return, some financial institutions may offer relationship benefits. For example, if an account holder has an auto loan, checking account and money market account, they might earn a higher interest rate. Make sure to ask about these benefits.
When choosing a bank money market account, it’s important to shop around. Securing the best interest rate will maximize earning potential on the savings balance. Over time, the account balance will build, continuing to earn more interest. Investors will also enjoy the benefits of having a fairly liquid investment.
Nicki Howell - Nicki graduated with a Bachelor of Science Degree in Business Administration Marketing. Upon graduation, she launched a career in ...
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