Why Use a Money Market Account Instead of a Savings Account?
Choosing the best place to keep your cash can be difficult decision with all of the available options in the market today. Two options that you could choose between are the money market account and the savings account. While you can get both of these accounts from a bank, one may be better than the other for you.
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Money Market vs Savings Account
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Money market accounts can be obtained from most banks and they are also available directly from investment companies. If you want to get a savings account, you can get one from a bank. You could open a savings account at your local bank or you could open an account with an online bank. Some banks are now offering high-yield savings accounts which help you make a little bit more interest than you could previously expect from a savings account.
Access
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One of the differences between these two types of accounts is the access that they provide. With the savings account, you have to either transfer money from your account to your checking account or physically go to the bank and make a withdrawal. You could also request a check be mailed to you. If you need access to your money quicker, a money market account might be better. You can usually write a check to access the money in your money market account. With money market accounts, you usually only have a maximum number of transactions you can make in a month.
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Minimum Deposit
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Another difference between the money market account and savings account is the minimum deposit. Typically, with a money market account you have to have a minimum amount of money before you can open an account. With the savings account, you can usually open an account with any amount of money. In some cases, you may have to have a very small minimum amount before you can open an account, but it is usually less than what you will find with a money market account.
Insured Accounts
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Since savings accounts are offered by banks, your account is insured by the Federal Deposit Insurance Corporation or FDIC. This means that if the bank is out of business, you will get your money back from the FDIC up to $250,000. When you put your money into a money market account, it may or may not be insured by the FDIC. If you get a money market account from a bank, it is insured, while investment brokerages cannot insure these accounts.
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