Should You Open A Money Market Savings Account

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The economy has really taken a lot of us on a ride recently. We are a nation of spenders, not savers, and that has really come back to bite many of us. The good news is that we can see this downturn as an opportunity to protect ourselves better in the future. Opening a money market savings account is a great first step to take.

A money market account is similar to regular savings accounts. You deposit money in the bank and you earn a certain interest rate on that money for as long as it’s there. You can withdraw it but you might lose some interest and/or have to pay some fees. It’s not quite as easy to get to as a standard checking account, but it is still liquid.

Having said that, there are some significant differences between a money market account and the ‘regular’ savings account. For one thing most money market accounts will require you to make a significant deposit to open the account. It can be as high as $1,000- $2,500. This will ensure you earn a higher interest rate, but for some people this amount is out of the question.

Another difference is the ease of access to your money. Many regular savings accounts will offer you virtually unlimited access to your money, with a money market account you are generally limited to only a few withdrawals per month. Usually between 3 -6. The good news is that many money market accounts will allow you to write up to 3 checks per month on your account.

Whether you open a money market account with a bank or a credit union they are still protected by either FDIC (for banks) or NCUA (for credit unions).

Before you open your account make sure to carefully go over all the details of your account, such as:

1) How is your interest calculated?

2) How much interest will you earn?

3) What is the minimum balance requirements?

4) How much will you pay to withdraw your money?

5) Are you limited to a certain number of withdrawals each month?

Don’t let this troubled economy sink your financial ship. Use this as an opportunity to get your finances in order; open a money market savings account so the next time the economy capsizes you will have a nice little life boat.