A money market account is a higher-interest deposit account offered by financial institutions, including banks and credit unions. If you’re saving for a future goal, or want your money to grow more quickly while avoiding unsecured market investments, a money market account may be the right choice for you. Use the information below to learn more about the advantages of money market accounts and decide if they’re the right choice for you.
Now that you know what a money market account is, it’s important to learn more about how it works, what restrictions it carries and how it could fit within your savings portfolio . Customers who open money market accounts are usually required to open and maintain the account with a higher minimum balance than traditional savings accounts. They are also more limited in their ability to withdraw money from the account. (Account holders are allowed roughly three to six withdrawals per month.) In exchange for leaving a higher amount untouched for an extended period of time, the bank may offer a higher interest rate to help you grow your balance faster.
While there are several reasons to save with a money market account, the main advantage is the account’s higher interest rate. Other benefits of opening a money market account include:
If you search for money market accounts on the Internet, you may find information about money market funds (also known as money market mutual funds). Money market funds are an investment in short-term debt securities, which means they typically reach maturity in under a year. In contrast, money market accounts earn more interest the longer you save, making them better as a multi-year savings option. Learn more about the differences between money market accounts and money market funds in the chart below.
|Money Market Account||Money Market Fund|
|Places money in low-risk, low-return investment||X||X|
|FDIC-insured bank account up to $250,000||X|
|Value can decline based on market conditions||X|
|Easy to withdraw money from account||X||X|
|Better for short-term savings||X|
|Better for long-term savings||X|
You may already be contributing funds to a traditional savings account on a monthly basis. While this is a good tool to grow initial savings and to continue saving for short-term goals, a money market account can be a more effective way of saving for something further down the road, such as:
Citizens Bank has many types of savings accounts , each designed to help you meet your savings goals. If you want to grow your current nest egg or save for a long-term goal, consider opening a money market account. To get more information about money market accounts or other ways to save, speak with a Citizens Bank customer service representative.