Creating a savings plan is the first step toward protecting your financial future. Certain banking products, like money market accounts, provide a safe and simple way to grow your funds by helping you earn more on the money you save.
What is a money market account?
A money market account can be thought of as a hybrid, offering features similar to both a checking and savings account. Officially known as a money market deposit account, this type of account accrues interest at a higher rate than the typical savings account, and since checks can be written against it, you’ll always have access to your money.
While the annual percentage yield (APY) is generally higher than with other savings products, money market accounts have transaction limitations and typically require a higher minimum balance than other types of deposit accounts. Money market accounts are FDIC insured up to $250,000.
Limitations of a money market account
It’s important to understand that a money market account is not a checking account. If it’s used for regular purchases and bill payments, fees could add up fast. According to Regulation D, Reserve Requirements of Depository Institutions, money market accounts have a limit on the number of transactions that can be made on the account. For instance, you are permitted a maximum of six transfers, withdrawals or checks written against the account. Exceeding these limits could result in fines or the closing of your account.
Who should consider a money market account?
Money market accounts are beneficial if you need access to your money in case of emergencies, since you can make a certain number of withdrawals without a penalty. Whether you’re starting to save for a new home down payment, college tuition or simply want a safe way to grow your nest egg, a money market account might be the financial product for you.
Choosing a money market account
When choosing a money market account, you should determine how much access you’ll need to your funds and take into account withdrawal limits. Nationwide Bank’s money market account offers free ATM access to your account and convenient online banking so you won’t have to worry about going over your limit.
Check our current deposit rates online, so you can easily compare our different savings products and find the one that will help you earn more on the money you save.