Tuesday, 7 May 2019

Maybe you've saved up some money and are looking for the best place to put it.

Or you've just started saving and want to explore your account options. In order to maximize your saving efforts, it's important to know what different types of savings accounts are available and which one is right for you.

Here are some answers to frequently asked questions about Money Market accounts that might help you decide.

What is a Money Market Account?

A Money Market account is a savings account that pays interest on your balance based on current interest rates in the Money Markets. Typically, the interest rate you earn on your Money Market account balances is slightly higher than that of a regular savings account.

In addition, many Money Market accounts offer what are called “tiered" interest rates, which means there are several different rates you can earn based on your balance.

Depending on your bank, a Money Market account might come with checks or a debit card. You can make unlimited deposits into your Money Market account each month.

You can also make unlimited in-person and ATM withdrawals from your account. Additionally, there are regulatory and possibly bank specific limitations on the number of withdrawals allowed per month.

What's the difference between a Money Market account and a regular savings account?

You will more than likely earn a slightly higher interest rate with a Money Market account than with a regular savings account.

One of the other main differences between a regular savings and Money Market account is how you access your money, which can vary from bank to bank. Typically, a regular savings account comes with an ATM card only, while a Money Market account might also offer check-writing capabilities and even a debit card.

From a regulatory perspective, transaction limitations for Money Market and regular savings accounts are the same.

Both savings accounts and Money Market accounts allow unlimited deposits per statement cycle. Additionally, both accounts are subject to a federal rule called Regulation D. This rule limits the number of convenience withdrawals to a maximum of six per month. Affected withdrawals include online withdrawals, overdraft protection transfers, transfers initiated by telephone and any other pre-authorized transfers. Withdrawing cash from an ATM or from a branch teller does not count toward this limit

What's the difference between a Money Market account and a CD?

With a Certificate of Deposit (CD), you deposit funds into an account and you're paid a fixed interest rate on your balance for a pre-determined amount of time or term, such as six months, one year or two years.

The interest rate you'll earn with a CD is typically higher than you'd earn with a Money Market account. However, you cannot access your money during the agreed-upon term without incurring penalty fees.

What's the difference between a Money Market and a checking account?

Money Market accounts come with checks and a debit card, and you can only make up to six withdrawals using checks or debit cards per statement cycle. Checking accounts offer many more transactions per statement cycle, and some have no transaction limits.

While a Money Market account has some of the same features as a checking account, it's not designed to be used for everyday money management.

Can I use a Money Market account for overdraft protection?

This varies from bank to bank, but many banks allow you to link a Money Market account to a checking account for overdraft protection.

Do Money Market accounts have time limits or terms?

No. You can keep your Money Market account open for as long as you wish.

Can I overdraw a Money Market account?

Yes, and if you do, you could be charged overdraft fees. However, these days most banks offer customers free online and mobile banking, which makes it easier to closely monitor accounts and avoid overdrafts. For example, most mobile and online banking services allow you to set up alerts so you'll be notified if your account balance falls below a certain amount.

Are Money Market accounts FDIC insured?

Yes, Money Market accounts are FDIC insured.

Does a Money Market account have a monthly service charge?

In most cases, Money Market accounts do have monthly service charges. Again, this varies from bank to bank, and some financial institutions may offer you ways to avoid paying a monthly service fee, such as maintaining a certain minimum balance or having a direct deposit made into your account.

How do I open a Money Market account?

Depending on the bank, you can open a Money Market account online or in person at a branch. When you open your account, you'll need basic personal information including name, address, phone number, date of birth, Social Security number and occupation. You will also need your required opening deposit, which in many cases is $25.

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