what is the diffrence between a money market account and a savings account?

Question

i want to open a high intrest savings account. or should i go with a money market account. should i go with the highest intrest rate or with a well known name.

Answer 1

Money market accounts are a variable of a savings account. They both earn interest. But the money markets usually offer a higher interest rate in exchange for a larger minimum balance and or initial balance. Money markets also have checks that you can write against them.

Now, Money markets and savings accounts do have certain restrictions and mandated by the federal government. You can only make 6 withdrawal transactions within a given month. In the case of the money market, three of these can be checks. If you abuse this for three consecutive months, the account will be transposed into a non-interest bearing account.

Hope this helps...

Answer 2

The difference will be the interest yield. Money market has a lock-in period by loaning money at a discounted rate to treasury bills, commercial paper or certificate of deposit which gain higher interest than saving account. Thus, saving account is the most liquid asset as you can always withdraw the money from the bank however money market you should wait for a minimum term usually 3,6,9 months to get the principal amount. Treasury bill is the safest as it is the loan to government.

Answer 3

A money market is where loan money comes from. When you pay with your credit card, the money comes from the money market to pay for your purchase. Then you pay fees and interest on the credit cards, some of which ends back as interest in the money market account. If the money is not being used for credit cards, the remaining money is used to buy bonds (usually government bonds).These things are not insured, but even under the worst case senerios that have hit the U.S., nobody has lost money in one (although you can lose worth from inflation and taxes).

A savings account is insured by the federal government (up to $100,000) and used by the banks for loans. They are required to keep only 5% of the money in the vault. They use the other 95% on loans.

Now both of these things should be telling you something. You are allowing other people to use your money for better interest (which they keep) and you take the risk. You should keep 6 months worth of emergency money that you spend in your savings/checking account, but no more.

Answer 4

It really depends on your risk appetite. Check the terms and conditions and check if the money market placement is insured. Money market accounts normally have a lot of restrictions on withdrawals (and matching penalties for pre- termination) - but they pay a higher interest than savings account. If you have money you can afford to "park" for a few months - then do money market placements like CD's. You can also try the online banks - they give higher returns as they are not burdened with the cost of maintaining offices.

Answer 5

No such thing as high interest savings. Got to get out of that area. SNH a good Reit. Can buy short term bonds. Can get 5% federally tax free with FPT & some others. Try to make money - does not mean taking unreasonable risk.