The interest rates offered on checking and savings accounts are so low at present that you have probably become more determined to find another, better option for your money. What is the alternative proposed by banks?
Money market accounts – they come with help as first. Your bank probably has already informed you about this very profitable option for your money and you believe that it would be reasonable to seize this opportunity to earn more and without the necessity to access the account regularly. Such accounts are claimed to be more beneficial than standard savings accounts – they are better interest-bearing and additionally, you receive the option to write checks. The truth is that good marketing tends to make any products much better than they actually are. Although we all are aware of it, we not necessarily bother to check how much profit an offer brings to us in fact. That is why we have done this for you and here we prove that money market accounts are not so lucrative as your bank asserts.
The main question is how much you earn on such an account. First of all, it is not profitable if you own only a few thousand dollars. So as to gain more that the typical 0,01% APY, you are required to deposit minimum $10,000, or even more as banks have different requirements. Unfortunately, meeting this requirement does not mean that you will earn much more – the better option is 0,04% APY. It can be a bit sadly surprising for those who have expected the promised very good deal. For loyal clients with other accounts in the certain bank the offer can be better, yet still not so much. In addition to this, your money market account balance needs to be kept above $1000-$2000, otherwise the monthly fee will be charged.
What about checks? A check option is even not available in some banks. In those where it is you have to accept the monthly limit (no more than six checks written in a month) if you do not want to pay an excessive withdrawal penalty or have your account converted to a checking account. At this point, we suggest considering some other options which may appear to be much more convenient and profitable. Being able to write checks is not worth the low interest rates on money market accounts. In such circumstances, we suggest going online with your payments or getting one of the payment apps like Venmo or Square Cash – it is a much faster way of transferring money than checks.
The last and most important point proving that money market accounts are not the best choice, is the presence of online savings options. The online banks outdo the traditional ones. Firstly, in the case of online-only banks you may get at least 1.00% APY on savings account with no minimum balance. Secondly, these banks usually have no account fees. And the offer of online checking accounts presents better as well.
Therefore, you should not finish your search by opening money market account. Obtaining higher interest rates along with the more convenient access to your money is still possible.