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Money Market Savings Account
by Bill Riley
A money market account (MMA) is a kind of savings account offered by
banks and credit unions. The difference between the normal savings
account and the money market savings account is that the MMA offers higher
interest rates. However, the money market account requires a higher
minimum balance than the normal savings account.
The important feature of MMA is that the money saved in the bank
under this option is insured by the Federal Deposit Insurance
Corporation (FDIC). With this insurance facility, you can ensure the
safety of your deposit; even if the bank goes bankrupt, you will not
lose a single penny from your savings. The FDIC was formed in 1933
with a view to save the customers, especially those of the failed
banks.
Money market savings account works in a similar manner as a normal
account works. You earn interest for your deposits, and as you wish
you can withdraw any amount of money from it. However, there are
certain limitations for the number of transactions in a month;
usually an MMA account enables you to have three to six withdrawals
and a maximum three checks a month. The bank will charge you a
service fees for any extra transactions from your account. Normally
it is between $5 and $15 per extra check in a month. Also you will
be penalized if your account runs short of the minimum balance as
per the terms of the bank. These service charges, however, may
differ from bank to bank. It is advisable that you do a thorough
study on the operation of the money market savings account of different banks before
selecting the one for you, so that you don't lose the money in the
form of hefty service charges.
As soon as you join an money
market savings account, you will be issued an account
register, in which you will record your transactions clearly. At the
end of each month, the bank will send you a statement of the
transactions, by which you can verify the account details. If you
keep this MMA run properly, by maintaining a good credit history and
transactions, you are likely to benefit more from the high-interest
savings than any other similar savings accounts.
Some banks and credit unions offer a modified version of
the money market savings account. It
is called the High Yield Money Market Investment Account (HY MMIA).
This is meant for accounts that can keep reasonably higher account
balance. If your account balance is above certain limit (often
stipulated by the banks), you will be able to convert your money
market savings account into
HY MMIA. The HY MMIA offers interest rates in proportion to the
account balance. Higher the balance, higher is your savings as
interest. This kind of interest rate offered by HY MMIA is often
referred as 'tiered' interest rates. As in the money market
savings account, this account
also allows you to withdraw the money as per your requirements.
In short, the money market
savings account is a disciplined and efficient
way of saving money. Also the involvement of FDIA with MMA makes it
one of the most secure forms of deposits through banks.
About the Author
Bill Riley has always been interested in money, and enjoys giving
others credit and
mortgage advice.
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