I was thinking about opening a money market account with a lcoal bank who offerse a 3month special rate of 5%. Does that mean I get 5% interest each month for the balance in the account?
2006-09-29 13:34:21 · 5 answers · asked by ipodder 2 in Business & Finance ➔ Investing
This means you have to keep the money in the account for a minimum of 3 months in order to get 5% interest. After 3 months the rate probabily falls back to something lower, most likely around 3-4.5%.
Make sure you read all the fine prints. There might be penalty or really low interest rate if you withdraw early.
I suspect that the 5% rate is an annual rate. If you deposit $1000 into this money market account, at the end of the 3rd month you will have $1004.17.
Also note that interest from money market account will be in the bottom Divident section of your Schedule B, rather than Interest section.
2006-09-29 14:08:01 · answer #1 · answered by JQT 6 · 1⤊ 0⤋
You're describing a short-term certificate of deposit, not a money-market account. And, no, you do not get 5% per month. Your rate is 5% annually. Over the 3-month period, you will actually receive a total of 1.25% interest on your deposit.
So, if you deposit $1000, you will have about $1012.50 in your account at the end of 3 months.
2006-09-29 13:45:47 · answer #2 · answered by Michael 4 · 2⤊ 0⤋
Stocks and bonds don't always outperform money market accounts. There are brief times where money market accounts give a higher returns. However, over long periods of time, stocks and bonds usually beat money market securities. Be sure you are not just comparing yields. The yield on stock mutual funds will only include the dividends. Yield does not include any appreciation in price. You will need to compare total returns, which can only be done accurately in hindsight.
2016-03-18 02:49:43 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I'm not too sure cuz I don't understand but I'm guessing it means if you open up a money market account you'll get 5% interest for the first 3 months (5% each month) and then it will go back to the normal % rate it is.
2006-09-29 13:43:24 · answer #4 · answered by iHEARTjuicy 1 · 1⤊ 1⤋
5% is the APR (Annual Percentage Rate). So, the total return for 3 months is 1.25%. However, since it is a CD, so, you will be locked in and if you decide to take your money out before the end of the term, you will have to pay a penalty. Currently, I think you can get 4.4% from ING direct, 5.05% from HSBC Direct and 5.0% from Citi direct ... and all those are regular accounts i.e. you can withdraw anytime.
2006-09-29 15:19:17 · answer #5 · answered by SoxPatsICY 1 · 1⤊ 0⤋
You get 5% PER YEAR.
The rate is valid for only 3 months, after that it will be a lower rate.
2006-09-30 13:07:33 · answer #6 · answered by Anonymous · 2⤊ 1⤋