What are The Pros And Cons Of A Money Market Account? One of the best ways that people use to save money is by opening a money market account. A money market account can simply be described as a combination of a savings and a checking account in one.
Because it allows you high-interest rates like a savings account why it gives you the ability to keep a checkbook and a debit card. But what exactly are the pros and cons of a money market account?
In everything that you do in life, there must be an advantage and disadvantages and that is what we are going to be considering for the money market account today. A money market account is not just all good they are also some things that are not likely to make you happy when you open a money market account. So today we are going to talk about both the pros and the cons of a money market account.
What Is A Money Market Account?
We have talked about what a money market account is before on this blog but today we are going to take a refresher course to our memory. A money market account is a type of account that can be offered by any financial institution such as banks credit unions online banks and others. They are a type of direct deposit account that gives the owner constant access to their money.
A money market account can also be described as an interest-bearing account which means that they can receive high interest when money is deposited there. This quality is what makes it similar to a savings account but like a checking account, it can be used to write checks and also have a debit card. This is the reason why I said a money market account is a combination of a savings and checking account.
The Pros Of A Money Market Account
Everything in this life has advantages and disadvantages which is why today we are going to take our time in this article to talk about both the advantage which are the pros and advantage which are the cons of a money market account. To start with today we are going to describe the pros of a money market account below. Gear for the below items are the pros of a money market account.
- A place to keep money
I have been conflicted about the right place to keep my money especially now that the stock market is in a volatile state a money market account might just be your saving grace. The money market account should be your safe haven because funds that are kept there are considered safe and at low risk. In addition, you get to withdraw your money anytime and also interest rates on it.
Because depositing funds into your money market account is very easy to do and also transferring funds between linked accounts is easy to become flexible to move your money around. This is especially convenient where you have your linked account in the same bank that you would be able to make use of a single debit card and write a checkbook for every one of them.
- Interest Rates
Interest rate is one of the things you need to look out for when you are opening a money market account. You need to be able to have a high enough APY so that you can be earning a significant amount of money on the money that you deposited in the bank. This is another reason why opening a money market account is a great idea.
The cons of a Money Market Account
Just as there are many pros of a money market account they are also various cons or downsides to using a money market account.
- Minimum Balance Requirements
The biggest downside to using a money market account is the fact that you have to maintain the minimum balance requirement of your bank. This is why it is very important to big a bank that has a very low minimum balance requirement. Because if you cannot maintain the minimum balance requirement you are going to be paying the minimum balance requirement fees which can eat away at your savings.
Some money market accounts offer a very high and competitive interest rate however most money market accounts offer an interest rate that is the same as a normal savings account. And if you would want your interest rate to be higher in those types of Banks then you will have to meet a minimum threshold of money to receive high-interest rates which is a disadvantage.
If an investor is receiving 3% of their total deposits as the interest rate in a money market account and the inflation is around 4% then the Investor is definitely losing money. This is a very big disadvantage or a con of having a money market account because the Investor is losing instead of making money.
What banks charge is their customer fees for banking with them and there are various types of fish that you can be charged when you open a money market account. One such type of fish is maintenance fees which is why it is very important to understand the type of fees being charged by your bank before opening a money market account.
How to close a money market account?
If you are tired of your money market account and you are wanting to close the account closing it is very easy to do. All you basically need to do is to contact your bank customer care to ask them if you are ready to close your account and then they will walk you through the steps and produce procedures necessary to close your money market account.
What are the Disadvantages of the Money Market?
Just as there are advantages they are also setting disadvantages of a money market account one of the major disadvantages of a money market account is the fact that withdrawers are restricted. It is not everything that you can have access to a money market account fund which means that they are setting withdrawal limits that is in pools in the morning market account.