A Money Market Account is a type of savings account that banks and credit unions offer. The difference being that it pays a higher interest rate, has a higher minimum balance requirement and limits the number of withdrawals per month.
Most investors are looking for ways to earn higher rates of interest on their deposits and investments. Banks are providing incredible value for those that deposit in money market accounts, in way of the best money market rates. Interest earned on money market accounts is compounded on a daily basis and paid monthly. The best part about compounded interest is that the customer earns interest even on the money earned from the bank as interest. The more money there is in the money market account, the more interest one earns.
The best money market rates out there can be anywhere around 6%, which is certainly very high considering the fact that investors are not bound to leave their money in the account for any period of time. However, the customer must realize that there may be a large variation in rates between various banks.
Just like any savings account, even money market accounts let customers withdraw money when they need, but at the same time restricting the number of withdrawals per month. If a certain balance is not maintained, some banks also charge a small fee and there may also be a fee on excess withdrawals. Keeping this in mind, it would do good to shop around and compare different banks to see what they are offering.
Banks or credit unions send monthly statements of account, where all the transactions for that particular month will be listed as well as the fees charged on the account and interest earned.
Banks are able to offer such high interest rates basically as most of the money market accounts are operated online and the overhead cost is less. This saving in overhead cost is translated into higher interest for customers, which in turn attracts customers to deposit their hard earned money in a money market account.
Money market accounts are for that that are looking to earn high rates of interest while saving, increase the earning power of money but do not wish to tie the money up in an account that is not accessible. All they need to do is invest in a money market account, sit back and watch the money grow.