Are money market savings right for you?

Money market, savings, checking accounts, CDs. Deciding where to keep your hard-earned dollars can be a confusing choice. While interest rates are an important factor in determining where you stash your cash, different types of accounts include a range of low-risk options with varying terms, restrictions and rewards.

Here are three questions to ask when considering a money market savings account along with other banking options.

How balanced are you?

Some accounts require a minimum balance to avoid additional fees. A minimum balance often is required in money market accounts while standard savings accounts typically have fewer restrictions. If you regularly run down your account to zero, look for an offer that doesn't require a minimum.

How much liquidity do you want?

If you need flexibility to turn investments into cash quickly, steer clear of CDs and their early withdrawal penalties. Even savings and money market accounts can impose penalties for too many cash withdrawals. The Federal Reserve limits the number of monthly withdrawals or transfers to six from these accounts. After account holders cross that threshold, banks can charge between $3 and $10 for each additional transaction.

Will this account support daily expenses?

Look into high-yield checking options if you want to use a traditional checking account to pay for daily living expenses. Bankrate's 2011 High-Yield Checking Study shows that a number of accounts offer attractive interest rates in return for a minimum number of debit card transactions, direct deposit and other simple requirements.

Be wary of extra fees that might accompany your account. Read the fine print before opening a money market savings or other account to avoid unnecessary penalties.


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Dear Dr. Don, This is a bad news, good news situation that I'm asking about. I just received several Series EE and Series I savings bonds. I am the so-called payable-on-death beneficiary on the bonds. My mom, who purchased... Read more


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