Finding a Bank with Favorable Money Market Account Interest Rates
Finding a Bank with Favorable Money Market Account Interest Rates
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Home Page > Finance > Personal Finance > Finding a Bank with Favorable Money Market Account Interest Rates
Finding a Bank with Favorable Money Market Account Interest Rates
Posted: Nov 21, 2011 |Comments: 0
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If you’re like many investors, you might be interested in an investment strategy that offers higher rewards than a typical savings account with less risk than a stock portfolio. Money market accounts strike the balance between risk and reward with high interest rates and loose connections to current market conditions. The interest rate you initially receive is determined by current rates, but the market doesn’t affect the actual balance of your investment. Additionally, while banks invest your money in short-term investments, your deposit is protected by the Federal Deposit Insurance Corporation (FDIC). Use the following five steps to find a bank with favorable money market account interest rates.
1. Narrow Your Search to Money Market Accounts
As you begin searching for a money market account, make sure that you’re not looking into any money market funds. New investors often look inadvertently at money market funds because they don’t realize the differences between the two types of accounts. When your money is invested in a money market fund, the entire balance of your account goes into mutual funds. This process can impact your savings dramatically, as it’s easy to lose everything when a few stocks perform poorly. However, if you put your savings into a money market account, you’ll only have to worry about the interest rate. Your interest rate will fluctuate based on current market trends, but the money you’ve actually deposited into the account is safe.
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2. Look for the Best Rates
To determine which account is best for you, get interest rate estimates from several banks and compare their offers. Typically, you’ll find similar rates at each bank because the figures are influenced by current economic conditions. Some banks run special promotions and offer lower rates for higher investments, so you should always shop around for the best quote. When you go into a bank for an estimate, try to have a rough idea of the amount you’re prepared to invest upfront and the amount you’ll invest over time.
3. Be Prepared with a Large Deposit
While savings accounts often have no minimum required deposits, you’ll need to have an initial investment prepared before opening a money market account. Banks categorize money market accounts by their deposit amounts and overall size. These factors affect interest rates, so it’s often beneficial to save more in order to reach a higher tier. You’ll find different requirements at each bank, but most banks offer higher interest rates to larger accounts.
4. Invest at the Right Time
Shortly before you’re ready to open a new money market account, be sure to watch current interest rates and overall trends in the market. You can’t predict what will happen next with any certainty, but you can gain insight into the interest rates you’re likely to receive. With these figures in mind, you can prepare to invest during a favorable time. If you’re having trouble finding the right time to invest, you can also put your money into another investment vehicle while you wait for interest rates to rise again. However, whether interest rates rise or fall, your investment is protected once it is inside of the money market account.
5. Maintain a Stable Account History
After you’ve found a bank that offers high interest rates and favorable account terms, do everything you can to maintain a stable account. While you’re generally allowed to make withdrawals from a money market account, your account history gains more credibility when you’re careful to keep the balance from dropping too low. A stable account history can help you to gain eligibility for higher interest rates in the future.
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About the Author:
Jess Hall is a personal finance writer located out of Jersey City. She likes to share with others how she manages to achieve a financially fit lifestyle. Her latest articles discuss the different bank products she has, including MMAs and CDs. Other sites that she likes to visit include https://www.aurorabankfsb.com/articles/banking-articles/best-money-market-rates
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