Money Market Fund Interest Rates

How Does a Money Market Account Work?

How Does a Money Market Account Work?

If you’re looking for a safe place to store your money while getting a return that’s comparable to a savings account, a money market account may be the right choice for you. Money market accounts blend a combination of popular banking features into one reliable, insured product that you can use to save for everything from a vacation, to your child’s college education. Here’s how they work, and how you can get the most out of a money market account.

An Account that Pays You Back

One of the greatest advantages of a money market account is that you get the benefit of compound interest. This is interest that is paid to you in addition to the interest the bank has already paid you. You can think of a money market account as similar to a CD, except that you can access your funds up to six times per statement cycle if you wish. The interest rate you’re paid on a money market account versus a CD is less – but many people are glad to have the added flexibility of being able to get to their money when they need it, rather than paying a penalty for early withdrawal.

Some money market accounts, such as those offered by www.aurorabankfsb.com not only give you the opportunity to make up to six withdrawals each statement cycle, but they also offer you a convenient array of ways to do it – such as by ATM, electronic banking transfer, telephone transfer, authorized and pre-authorized withdrawals. Having easier ways of reaching your funds gives you better ways to manage your spending.

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An Excellent Savings Vehicle

Money market accounts give you great incentives to save, too. As long as you keep your account at or above the minimum balance (which can start at just ,000), you won’t pay any monthly fees and you’ll earn a competitive interest rate on your money. This is an excellent way to grow your savings without facing stiff penalties, account management charges and other fees that can nibble away at your hard-earned cash. You can even attach your money market account to other bank accounts (such as checking) to help you avoid overdraft fees.

Grow Your Deposits Faster!

When you open a money market account, you’ll get a register, similar to the type you get when you open a checking account. Each month, the bank will send you a statement which includes your compound interest. You’ll be able to see any withdrawals you’ve made, any fees and most importantly, how much money you’ve earned during that time. Of course, rather than rely entirely on the bank, you should also independently monitor your withdrawals and deposits on your register, to ensure that your statement matches up with the bank’s. This is called reconciling, and is a vital part of good financial management skills.

Keep in mind that in order for your deposits to be safe and FDIC-insured, you’ll want to open an actual money market account, not invest in money market funds – as there is a significant difference. Money market funds are not FDIC insured, but money market accounts are at member banks – which means that your money is protected up to 0,000 per customer, per account type, against the (highly unlikely) insolvency of the bank itself. What’s more, opening a money market account and getting all these savings benefits for yourself is incredibly simple.

Just go to the Aurora Bank money market page at www.aurorabankfsb.com and click the Open Account button. You’ll be walked step by step through the process and will receive a Welcome Kit in the mail with all the details on your new account. Happy Saving!

Incredible Money Market Rates by Identifying Investment

Incredible Money Market Rates by Identifying Investment

The first and possible the most important consideration when choosing a money market is the interest rate.  And the interest rate is directly related to what type of money market account you choose to invest in.  Money market funds, whose rates of returns are directly related to the market, generally pay the best rates, but also have the most risk.  Let’s discuss further the difference between money market accounts and money market funds.

Money Market Accounts

What we traditionally think of as a money market is the money market account.  These act almost exactly like a regular savings account.  These accounts often pay better interest rates than a basic savings account.  In return, the account holders have to agree to particular terms.  For example, a minimum account balance must usually be maintained, which in some cases can be several thousands of dollars.  Also, the number of transactions the holder can make per month a usually limited to a few withdrawals or transfers.  The most important factor in this type of money market is that it is insured by the FDIC just like a regular bank account.

Money Market Mutual Funds

A money market mutual fund is very similar to a money market account in that it requires a minimum initial investment, a minimum account balance and the number of transactions per month are limited.  The biggest difference is in how the account determines the interest.  In a money market mutual fund, the interest is determined based off how well the market is doing.  Each individual share remains constant at .00, so as the value grows, you are compensated in the form of additional shares.  These shares can later be cashed in for liquid assets if the holder wishes.

The second type of money market investment is called a money market mutual fund. Money market mutual funds invest in short-term, low-risk debt securities, such as CDs, Treasury bills, and municipal bonds.  Also, since these accounts are based off the market, the FDIC does not fully insure the accounts.

Both of these types of accounts are relatively safe investments and make a good addition to a well-rounded portfolio.  It’s not a bad idea to have one of each to truly diversify your portfolio.

Incredible Money Market Rates by Identifying Investment

Incredible Money Market Rates by Identifying Investment

The first and possible the most important consideration when choosing a money market is the interest rate.  And the interest rate is directly related to what type of money market account you choose to invest in.  Money market funds, whose rates of returns are directly related to the market, generally pay the best rates, but also have the most risk.  Let’s discuss further the difference between money market accounts and money market funds.

Money Market Accounts

What we traditionally think of as a money market is the money market account.  These act almost exactly like a regular savings account.  These accounts often pay better interest rates than a basic savings account.  In return, the account holders have to agree to particular terms.  For example, a minimum account balance must usually be maintained, which in some cases can be several thousands of dollars.  Also, the number of transactions the holder can make per month a usually limited to a few withdrawals or transfers.  The most important factor in this type of money market is that it is insured by the FDIC just like a regular bank account.

Money Market Mutual Funds

A money market mutual fund is very similar to a money market account in that it requires a minimum initial investment, a minimum account balance and the number of transactions per month are limited.  The biggest difference is in how the account determines the interest.  In a money market mutual fund, the interest is determined based off how well the market is doing.  Each individual share remains constant at .00, so as the value grows, you are compensated in the form of additional shares.  These shares can later be cashed in for liquid assets if the holder wishes.

The second type of money market investment is called a money market mutual fund. Money market mutual funds invest in short-term, low-risk debt securities, such as CDs, Treasury bills, and municipal bonds.  Also, since these accounts are based off the market, the FDIC does not fully insure the accounts.

Both of these types of accounts are relatively safe investments and make a good addition to a well-rounded portfolio.  It’s not a bad idea to have one of each to truly diversify your portfolio.