You’ve done a little research and decided that a money market account may be the right savings account for you. Several financial institutions, such as banks and credit unions, offer money market savings accounts online or at their branch locations. But is a money market account the best savings solution for your situation?
Things to Consider Before Opening a Money Market Account
Money market funds are frequently confused with money market accounts due to the similarity in names. Investment companies and brokerage firms offer money market funds in the form of fixed income securities, which are invested in U.S. Treasury bills. Money that is put into a money market fund is not protected.
This is not the case with a money market account. The Federal Deposit Insurance Corporation (FDIC) and the National Credit Union Association (NCUA) offer insurance to banks and credit unions to protect depositors. If a bank or credit union crashes, the FDIC and NCUA will cover up to $250,000.
Sometimes a money market account does not offer the highest interest rate. A regular savings account may outperform a money market account, which is why it’s a good idea to shop around. The liquidity of a money market account should be taken into consideration as well. You might be able to write checks, access ATMs, or use a debit card. However, some banks may limit the amount of transactions you can make per month, so if you need more access to your money, a high-yield checking account may be better suited for you.
Are you ready to start a money market account? Here are a few key steps you should take first.
Shop Around and Compare
Since many different financial institutions offer money market accounts, don’t settle for the first product you come across. Shop around. There are several online tools you can use to look at different financial institutions and compare them. Once you’ve narrowed down your list, check out each financial institution’s website, which typically offers more in-depth information. Some may even provide a bonus or gift to open a new account. Make sure you read the guidelines to understand what steps are required to qualify.
Review and Choose Based on Features
If you want to have the ability to write checks, find the accounts that offer this feature. Some money market accounts will provide you with an ATM card, which you can use to withdraw cash within their network of ATMs. Be sure to check for fees involved if you plan to use ATMs outside of the institution’s network. Other accounts may give you a debit card to use for your ATM access and use for purchases at retail stores or online. Withdrawal limitations may apply in these cases, so make sure that you keep that in mind.
Check Into Account Fees
Look for accounts that either charge you the lowest fees or no fees at all on the features you want. Fees can quickly eat up the interest earned on your account. Make sure your savings strategy aligns with the account you choose. For instance, if an account requires a minimum deposit of $2,500 and it will be difficult for you to keep above that amount, you should cross it off your list.
Compare the Minimum Deposit and Balance Requirements
To start a money market account, you generally have to put down an initial deposit. This deposit should be an amount that you can do without and comfortably afford. Minimum balance requirements are typically around the same amount as this initial deposit. You could end up paying a penalty or maintenance fee if you fall below their minimum balance requirements.
Open the Money Market Account That Meets Your Requirements
Once you’ve found the right institution and money market account product, it’s time to open your account. You can usually go into the financial institution’s branch or open an account online. If you plan to visit a branch location, call them and ask what documents may be needed, such as a driver’s license or another form of identification. Also, check to see what the institution will accept for paying the initial deposit, and then bring the cash, a check, or debit card with you.
Opening a money market account with NASB is safe and easy. If you have any questions, give us a call at 800-677-6272 to talk to one of our experts.