5 Most Important Money Market Account Benefits for Beginners – Features and Best Rates

Banks and Credit Unions issue money market accounts. But what is a money market account? These are interest bearing accounts. Some of the money market account benefits are unparalleled.

Firstly, money market accounts offer higher interest than savings A/C interest rates. Most of the accounts also offer check withdrawals and unique debit card benefits.

However, 98% of Americans still rely on traction accounts like savings accounts. But you must invest in MMAs to create a higher tangible net worth.

Prime money market account benefits

• Your money account comes with these prime benefits:
• The banks and credit unions offer money market accounts, so they are FDIC-approved
• The Money market account interest rates are way higher (at least 1 to 1.5% higher than Savings A/C)
• you can withdraw money from MMA accounts anytime
• The yield checking accounts may offer higher interest but impose many restrictions on users

Money market IRAs

To understand the benefits of money market accounts better, you must realize IRAs.

If you invest $2500, your dividend rate will be 0.50%. The same investment will earn you an annual yield of 0.50% APY. Meanwhile, you have to maintain a minimum balance of zero. The following investment tier is $2500 to 9999. For this range, the dividend rate that you will get is 1.09%. Again, the annual percentage yield is 1.10%. But you have to maintain a minimum balance of 2500 for that. In the same way, the dividend rate keeps increasing for the higher investment tiers. Proportionately, the annual percentage yield also increases.

Money market account benefits

You are now aware of the basic features of the money market accounts. But you cannot certify that the interest will be consistently higher. Several high-yield savings accounts or certificates of deposits may offer around 5.5 to 5.7% return. In that case, the APY is also higher.

But I would still choose the money market accounts. Firstly, they offer check withdrawal opportunities and debit card benefits. Secondly, I can easily withdraw my earnings at any time.

However, experts say the Money market account rates are comparatively higher. No doubt its liquidity is also very high. But these are not the only benefits you expect from money market accounts. So here are five prime money market account benefits you cannot ignore:

1. Fund accessibility

The money market account is an interest bearing account. It is also highly flexible. From ATM withdrawals to check-writing facilities, it offers all the privileges that savings accounts naturally provide.

Therefore, people can quickly increase their savings through money market accounts. At the same time, they can access funds with greater flexibility.

Generally, you can easily withdraw your money for free from money market accounts. But most of the accounts offer six free withdrawals every month. After that, you might have to pay additional fees.

2. Better rates than other accounts

The money market account benefits may be numerous. However, most Americans seek the main benefits of higher interest rates associated with these accounts. Money market accounts mainly offer greater interest than checking accounts. Their interest is also higher or at par with the savings accounts referred to as high-yield accounts. The current average APY on money market accounts for savings is 0.59%.

But that’s not the limitation. The top 20 to 25 money market accounts offer more than 5% annual percentage yield.

But there is another trade-off you should know about. Your money market account may often demand a minimum balance of 5000 or higher. You must meet such requirements on a compulsory basis or pay higher fees or fines.

Banks require higher balances on their top-tier APY returns.

3. Check writing facility

Check writing is a valuable feature of money market accounts. It adds flexibility and the desired liquidity that other products do not offer. Savings accounts do not provide easy debit withdrawals or check-writing facilities at 0 minimum account balance. But you would get the same feature with a money market account.

Financial advisors say the upper limit of six monthly withdrawals were applicable according to regulation D, a formal federal statute. However, the statute is relaxed currently.

4. Safety concerns

There are almost no safety issues with money market accounts. The lack of safety issues is a prime money market account benefit. The federal deposit insurance company insures up to 2.5 million USD for every individual investing in money market accounts. If you have two accounts with two banks or credit unions separately, the FDIC insurance applies to you twice.

5. Best In-Class Withdrawal Facilities

The most convenient feature of money market accounts is the timely withdrawal facility. And they are one of a kind among deposit accounts category to provide this facility to customers. What’s more important is that the ATM withdrawal does not count towards each customer’s monthly six-month withdrawal limit.

Henceforth, you can technically take out your money when you feel like it. However, financial advisors say that money market accounts are primarily for saving and not for your regular expenses. Unless you save, you can’t earn the higher cut of interest that you desire from these accounts.

6. Comparative benefits

Traction and interest accounts provide some benefits to users individually. So, let’s compare them to find out who provides higher benefits. The joint compatible accounts in fraction with money market accounts are savings accounts, checking accounts, deposit certificates, and money market mutual funds.

In connection, you should know that money market accounts and mutual funds are different.

We can evaluate these four accounts in the context of 4 standard criteria. We are primarily concerned about the interest return from the accounts. Hence, we will compare these four accounts based on their type of interest.

7. Interest

Firstly, money market accounts offer variable interest. The same goes for savings accounts. Thirdly, the checking account either offers no interest at all or variable interest. However, the interest you get from deposits is fixed. On the other hand, the money market mutual fund offers variable interest.

8. Federal Insurance

The FDIC interest schemes cover a good interest-bearing account. All five account types discussed here have federal insurance, barring the money market mutual funds.

9. Check withdrawal

The third most craved criterion is withdrawal. In this regard, the best online money market accounts offer check withdrawal and transaction facilities. The savings accounts, on the other hand, provide no such facility. The same goes for deposit certificate accounts. The money market mutual funds also sparingly offer check facilities.

10. Debit Cards

Money market alternatives you can try

If you want other accounts with the same benefits and similar features, try these-

Passbook savings accounts

The average savings accounts do not need any minimum balance or minimum deposit. Meanwhile, you are interested in whatever you deposit. However, the interest rate is not as high as that of money market accounts.

Money market accounts are FDIC-insured. The savings accounts also have the same benefits. So check with your bank on other restrictions regarding withdrawals from savings accounts. And open a suitable account today.

High-yield savings accounts

If one account matches the interest rate offered by money market accounts, it will be a high-yield account. The high-yield accounts have insurance from the FDIC as well. However, one of their limitations is that they have more regulations, such as direct deposit while opening accounts.

Checking accounts

The checking accounts have a prominent advantage over the money market accounts. They offer unlimited transactions through checks and ATMs. They also provide unlimited wire transfers.

You also get a zero or meager interest rate with these accounts.

Enjoy Your Benefits

Now you know what the money market accounts offer. But do your research first before choosing. Park as much cash as you want. Earn benefits and withdraw as you go.

People of every age and economic status can enjoy money market account benefits. You can save early, around 25 to 30, and create a fortune through money market accounts.

Retirees can enjoy the benefits by investing their retirement savings in quick time. But I would suggest the money market is for short-term investments and fast gains.

Choose your investments accordingly.

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