Choosing Between a Savings and Money Market Account
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Posted On :
Nov-22-2011
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Article Word Count :
618
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When you're looking for an investment vehicle that couples high rewards with minimal risk, savings and money market accounts provide you with solutions.
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When you're looking for an investment vehicle that couples high rewards with minimal risk, savings and money market accounts provide you with solutions. Each type of account includes a different series of benefits and accompanying drawbacks, but it's easy to find a favorable option with careful consideration. To begin earning interest on the money you're saving, consider the following aspects of each investment. Regardless of your financial situation, there's a low-risk investment alternative waiting for you.
Finding the Highest Interest Rates
For many investors, the ultimate decision between money market and savings accounts comes down to a single consideration. Consumers want to invest in accounts that earn the highest interest rates. In most cases, you'll find the best rates through money market accounts. Banks invest the cash they hold from money market accounts into short-term investments. Because they earn money on your investment, they are able to offer you a higher interest rate. Savings accounts also carry favorable rates and typically yield higher interest rates than checking accounts. However, if finding the highest interest rate is your main concern, money market accounts are the best bet.
Looking for the Lowest Minimum Balance Requirements
Some people make their decisions based upon minimum balance requirements. If you want an account with a low threshold for your initial deposit, compare terms between savings accounts. Generally, money market accounts require higher upfront deposits because they offer higher interest rates. However, some savings accounts have no minimum balance requirement to get started. Investors who aren't prepared to commit large figures to the future can begin earning interest right away through savings accounts. Consumers interested in money market accounts will need to be prepared to save a minimum balance of $1000.
Choosing an Account with Accessibility
It's also important to consider how often you'll need access to your money. Both savings and money market accounts grant some accessibility, but they do have a limited number of withdrawals. Typically, you'll be allowed to make six withdrawals per month without incurring penalties. If your savings is destined for a short-term goal such as wedding expenses or your teenager's college tuition, be sure to choose an account with flexibility. When you need the money, you can simply make a withdrawal without worrying about fees or other restrictions. Investments with less flexibility, such as certificates of deposit and mutual funds, are more suitable for people with long-term savings goals.
Considering Additional Fees
Look into each account's specific terms before filling out any paperwork. You'll sometimes encounter fees for checks, balance requirements or additional withdrawals with both savings and money market accounts. Though you can run into these extra charges with both types of accounts, the specific terms can vary between each. For example, money market accounts might have stricter limitations on minimum balance requirements than savings accounts. Consider which terms will be more difficult for you to adhere to and choose your new account accordingly.
Selecting an Investment to Meet Your Individual Needs
Once you understand the differences between money market and savings accounts, you're ready to choose an investment solution that meets your financial needs. This decision encompasses numerous factors, so it's essential to research terms and agreements from each bank before proceeding. Generally, if you have a small sum of money that you're ready to invest, savings accounts offer favorable interest rates with terms that are easy to meet. Investors with larger deposits prepared will enjoy the benefits of money market accounts, as they'll earn higher interest rates in a relatively low-risk investment environment. When you choose an investment strategy that feels comfortable, you'll experience greater success and a renewed sense of security in the future.
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Article Source :
http://www.articleseen.com/Article_Choosing Between a Savings and Money Market Account_108330.aspx
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Author Resource :
Jess Hall is a personal finance writer located out of Jersey City. She likes to share with others how she manages to achieve a financially fit lifestyle. Her latest articles discuss how she has been able to grow her savings with a money market account. Other sites that she likes to visit include https://w
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Keywords :
account,
Category :
Finance
:
Finance
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