How to Choose the Right Money Market Account
How to choose the right money market account depends on what you need and are looking for. With this type of account, things are not always what they appear to be. Most investors and people saving money would think that the highest interest rate would bring the most for their money. Be aware of the fees that are associated with this type of account.
Many banks and financial institutions offer interest rates higher than traditional savings accounts but take on a monthly maintenance fee. In many cases, this fee amount is equal to or greater than the interest that would be paid out on the balance. This will be translated to either no interest being paid or a loss of your initial deposit if the balance is not high enough to pay for the maintenance. These fees range from $0.00 to $20.00 a month or statement cycle.
The deposits in a money market account are one of the safest investments available to investors. The FDIC insures these deposits up to and including $250,000 at the present time. This type of investment is a low risk but also has a low return.
There are federal restrictions on all money market accounts. One of these is that there is only 6 withdrawals allowed per statement cycle or else a penalty will occur. If there is a chance you will need to make more, then look at the price of the penalty. This price does vary from the different financial institutions.
The current money market rates vary from 1.70% APY at Colorado Federal Savings Bank to numerous ones with an APY of 0.10%. Knowing how to choose the right money market account will be determined on how you plan to use the money.