An Overview

A personal money market account is neither a checking nor a savings account, although it has characteristics of both. Instead, it is an interest-bearing account that generally has higher interest rates than a savings account while requiring a higher minimum balance.

What makes a personal money market account similar to a checking account is the ability to write checks, which is not possible with standard savings accounts. With a money market account, you can typically write a limited number of checks each month against the account.

Transaction Limits

Similar to a standard savings account, a personal money market account follows federal regulations pertaining to transaction limits. These regulations prohibit account holders to making more than six pre-authorized or electronic withdrawals, payments, or outgoing transfers in a calendar month. Any over-limit transaction may be accompanied by a fee.

However, there are some exceptions to this rule. Withdrawals directly from a teller at a bank do not count towards your limit. Withdrawing funds from an ATM also does not count. Many banks also offer a debit card or ATM card to make it fast and convenient to gain access to funds from your personal money market account.

Minimum Balance

Most savings accounts require a minimal minimum balance or no minimum balance at all to maintain an account and avoid monthly maintenance fees. However, money market accounts differ in this aspect. Most MMAs require a substantial minimum balance to open an account and avoid fees.

While the minimum differs from bank to bank, the average minimum balance is between $1,000 and $10,000. If your minimum balance falls below the balance requirement, maintenance fees may not be waived. If you make this mistake too often, maintenance fees can quickly eat up your return.

Account Benefits

One of the biggest perks of using a personal money market account to grow your funds is the higher interest rates. The interest rate on a MMA is tiered, compounded, and credited on a monthly basis, allowing accounts to accrue more profits as the balance increases.

The interest rate on a personal money market account is determined by a number of factors, including the bank you use and the amount of money that you deposit into the account. All funds in the account can be easily accessed by account holders at any time through checks, transfers, or ATMs. If you bank online, you can see transactions and other details in the same way as you would a standard checking or savings account.

Your funds are protected up to the $250,000 limit per account based on Federal Deposit Insurance Corporation regulations. This makes personal money market accounts a safe and low-risk investment.

Like most personal banking products, a money market account comes with certain services and conveniences, such as mobile banking, e-statements, and money management tools.

Best Candidates

Not sure if you are a good candidate for a personal money market account? A MMA may be the right choice for you if you have extra savings available to maintain the minimum balance on an account. You may also be a good candidate if you would like the ability to write checks against your savings account.

If you are looking for ways to grow your savings, a money market account may be a good option. However, you should also consider other savings avenues, such as CDs and IRAs. Certificates of deposit (CDs) are excellent for both short-term and long-term investments and offer competitive rates.

If you are saving for a particular purpose, such as retirement, an IRA may be a more suitable option. An individual retirement account allows individuals to save towards retirement with either tax-free growth or a tax deferral. Be sure to compare your options to find which savings account is best for your needs.

Setting Up a Money Market Account

After working hard to build your savings, you want to ensure that you are getting the most out of your money. For more information about MMAs or how to set up a personal money market account, contact FVCbank.

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How Does a Money Market Account Work for Business?

Money market accounts work similar to conventional bank accounts. By providing some personal identifying information, you can open a business money market account and make an initial deposit. Once deposited, your money will continue to earn interest at a variable rate, which means the rate could go up or down over a period of time. Account holders are able to access their funds at any time using a debit card or check. When considering the amount you will earn with interest, take into account certain fees such as maintenance costs and minimum balance requirements.

A business money market account is basically a mix between a checking account and savings account. Making deposits is easy and the number of deposits you can make is unlimited. While you can access your money easily, there are some limitations. The Federal Reserve Board prohibits customers from making more than six total withdrawals each month from their money market account. However, teller withdrawals do not count towards this limit. With a money market account, you money remains safe in the bank as long as the institution is FDIC insured. Before choosing a bank, make sure that your account will be covered by the FDIC.

Some people confuse a business money market account with a money market mutual fund or money market fund. While there are some similarities, these two options are very different. Money market funds are offered by other types of businesses like investment companies. Unlike most money market accounts, money market funds are not insured by the FDIC, which means you are at risk for losing any money that you invest. While money market funds can be convenient by providing fast access to cash when you need it, the interest rates are typically lower and the accounts are far riskier.

What Are the Benefits of Business Money Market Accounts?

As a business owner, you always want to make the right decision for your company in all aspects of financing. Opening a business money market account can be a smart choice when trying to gain interest on existing funds. One of the biggest advantages of business money market accounts is their level of safety. As the accounts are insured by the FDIC, you can rest easy knowing your funds are protected. The FDIC insures deposits and any incurred interest to the maximum amount allowed by law.

Another major perk of business money market accounts is the customer’s open access to funds. While you are limited to six withdrawals per statement cycle when using a debit card, check, or form of transfer, you are free to access your money via teller anytime you wish. This means that your money is not tied up unlike other types of savings accounts like CDs. While your money sits in the account, you can also count on interest to accumulate. The interest rate you receive for a money market account will ultimately depend on the bank you choose and the amount of funds you initially deposit.

Along with the benefits mentioned, money market accounts often come with other key advantages that can be beneficial for businesses. Some common extras that you may come across include waived monthly fees with minimum balance, ATM access, special interest rate bonuses, access to banking specialists, daily interest rate accrual, free or discounted checks, credit or debit cards, and increased number of free monthly transactions. To know exactly what extras you have access to, speak with a professional banker from your institution. Comparison shopping is the best way to ensure that you get the best account terms and extras.

Apply for a Business Money Market Account

From business loans to savings accounts, knowing how to best handle your money is crucial for the long-term success of your company. When it comes to earning interest on your money, many business owners turn to money market accounts. A business money market account is fast and easy to open, typically requiring the same paperwork that would be required to open a standard business checking account. Interest made on your money market account is typically compounded daily and paid out monthly. For more information about business money market accounts or to take the first step to opening a business account, contact a professional banker.

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