When you want to stash away some of your money, it’s likely you’ll turn to the account options provided by local banks and credit unions. While it’s common to open a checking and savings account for easy access to your cash, it’s important to consider all of your options - including money market accounts (MMA). Below we’ll outline what your options are and the important considerations to make as you decide which is right for you.
What Is a Savings Account?
Just as it sounds, a savings account is a bank account specifically used for saving money. Because these accounts are designed to house money on a more medium or long-term basis, they typically offer a better interest rate than checking accounts. For many, a savings account is used to cover unexpected expenses such as a job loss or sudden home repair. In addition, savings accounts can be used to save for short-term goals, such as holiday expenses, upcoming vacations or house renovations.
To access the money in your savings account, you will typically need to visit a bank teller or utilize your online banking system. Savings accounts are not accessed through the use of checks or debit and ATM cards. Instead, it is common to link a savings account to a checking account, where these methods of withdrawal are easily used. In fact, Regulation D limits users from withdrawing money from their savings accounts to no more than six times per month.1 Attempting to withdrawal more than six times could result in penalty fees or account suspensions.
What Is a Money Market Account?
Think of a money market account as a hybrid between a checking and savings account. It is designed for medium or long-term savings, but it offers easier access and withdrawal capabilities than a savings account would. When using an MMA, the bank actually invests the funds you deposit into the marketplace.
While MMAs are under the same regulation by the SEC in regards to withdrawal limits, most money market accounts can be accessed using checks or ATM cards.
What’s the Difference Between a Savings and Money Market Account?
The biggest difference between these two types of accounts, aside from the ability to withdraw, is the interest rate. Generally speaking, MMAs will offer a higher interest rate than a savings account. In turn, however, many MMAs will require a minimum amount to open and remain in the account at all times.
While they’re similar in nature, there are a few key differences to consider as you decide which bank account type is right for you. While the higher interest rates of an MMA may be appealing, you want to be sure you’re able to make and keep the minimum required amount in the account. And if savings is your biggest concern, will the ability to access your money easily deter your efforts? If so, you may want to set aside what you have in a savings account instead.
As you look to accrue savings and interest, it’s important to weigh all of your options. Remember to consider the interest rates, minimum requirements and accessibility differences of your savings and MMA account options to find what works best for you and your savings goal.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
Ascend Investment Partners is not a legal or tax advisor. You should consult with your attorney, accountant and/or estate planner before taking any action. Ascend Investment Partners did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The opinions expressed in this report are those of the author(s) and are not necessarily those of Ascend Investment Partners or its affiliates. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy Services offered through Kesler, Norman & Wride, LLC dba Ascend Investment Partners, a Registered Investment Advisor. This message and any attachments contain information which may be confidential and/or privileged and is intended for use only by the addressee(s) named on this transmission. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. If you do not wish to receive marketing emails from this sender, please send an email to firstname.lastname@example.org Please note that trading instructions through email, fax or voicemail will not be taken.
To Get Started Click Here
Sign Up for Email to stay in touch