Benefit from high money market rates
Low-risk investing options like money market accounts, or MMAs, are ideal places to store savings, so you can park your money somewhere without the worries that typically come with high-risk investments such as single stocks. To avoid fees and see a return, money market accounts are best for those who have at least $10,000 to put away, though less money can still reap the benefits.
Find rewards for new money market accounts
Many banks offer higher introductory money market rates for the first three months, increasing your savings during those months. These introductory rates are often twice the typical rate, which is a nice bonus if the money market suits all of your needs. You can compare money market accounts and savings accounts at Bankrate.com.
Make sure it’s FDIC-insured
Before committing to a particular money market account, confirm that the account is fully insured by the Federal Deposit Insurance Corp. Most MMAs are fully insured, but make sure they include the $250,000 depositor insurance. You’ll feel safer knowing your low-risk investment is indeed secure and feel confident about putting more money into the account.
Consider an online money market account
The cost of owning and operating physical locations puts many banks at a disadvantage, so online banks often have better money market rates. If you are comfortable with a virtual bank, you could see much higher returns. There are some disadvantages, such as high ATM fees and the lack of face-to-face banking, but these may be of little concern if you won’t be performing numerous transactions each month.
Avoid fees by maintaining minimums
If you don’t maintain the minimum balance in your money market account, you may get dinged with fees even if you get good money market rates. Know the fees before you settle on a particular bank. If you can’t maintain the minimum balance, you should consider a different account. The fees will be a hindrance to your savings plan and may even outweigh the interest you are receiving.