The Pros of Having a Money Market Account
If you need to build an emergency fund or finance a short-term savings goal, a money market account can be a suitable choice. With a money market account, you retain ready access to your money while earning a higher rate of interest than you get in many other short-term investments.
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Safety
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If you use a bank that is fully insured by the Federal Deposit Insurance Corporation (FDIC), the money you put into a money market account is protected up to a total of $250,000. This safety is an important consideration, and you should avoid investing money in a bank that does not carry this FDIC insurance. If you do so, you are putting your money at risk.
Yield
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Money market accounts tend to have higher interest rates and yields than checking or savings accounts. That higher yield can provide a better stream of income and a higher return on your money than you could get elsewhere. To get the best possible interest rate on your money market account, you should shop around, both at traditional banks and online institutions.
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Access to Funds
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When you own a money market account, you can access your funds whenever you want. Depending on the restrictions of the account, you can either write a check, use your ATM card or visit a local branch to get the money you need. This ready access to your capital means a money market account is a suitable vehicle for building an emergency fund or saving for a short-term goal.
Predictable Income
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When you invest in a money market account, you can generate a predictable stream of monthly income. The predictability of that money makes planning your taxes easier, because you can project the amount of interest income you will have for the year. A steady and reliable income can also make planning your budget easier, because you know how much income to expect month to month.
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