Are you researching different types of savings accounts for your money? If you can maintain a high balance, a money market account may be the right choice for you. Money market accounts are great places to save money when your end goals are to start an emergency fund, save for tax payments, or take a vacation. The interest-earning can be higher than some other savings and checking account types.
Types of Savings Accounts
There are three main types of savings accounts that you can choose from. Each of them has characteristics that make them unique and cater to different needs.
Regular Savings Account – This type of account is the most common form of savings account. You generally earn the least amount of interest with this type, but it is higher than keeping your money in a checking account. Regular savings accounts fall under government regulation, in allowing depositors to make up to six transfers or withdrawals per month.
Certificate of Deposit – Also called CDs for short, these savings accounts generally offer the highest interest. You agree to the financial institution’s terms in keeping your money deposited for a certain amount of time, called a term. This term could last a few months or up to five years. Generally speaking, the longer the term, the higher the interest you’ll earn. While your money is in its term, you aren’t allowed to take the money out. If you withdraw from a CD before the term ends, you will be subject to a withdrawal fee or may lose part of the interest.
Money Market Account – MMDAs have a mix of checking and savings account features. You may receive a book of checks that you can write against the account. Some institutions will issue a debit card that you can use to access funds at ATMs and make purchases. MMDAs generally pay out more interest than a savings account and require a higher minimum balance as a tradeoff. They are subject to the six-transaction limit per month just as a regular savings account.
Interest Earned on a Money Market Account
The interest that you earn on an MMDA is generally compounded daily. You should be able to look at your statements and determine what day the interest is placed in your account
Since the interest is compounded, the financial institution pays you additional interest on the money that has already earned interest. This maximizes your interest-earning potential.
Financial institutions vary significantly with the amount of interest they pay on an MMDA. Some financial institutions will also offer cash incentives to open an MMDA, so it’s in your best interest to shop around and look at a variety of different banks and credit unions.
You can open a money market account with NASB to help you achieve your savings goal. We have two high-performance accounts for you to consider. Call us today at 855-338-0915 to learn more.