What is a Money Market Account?
Another Method of Saving Money and Earning Interest
At First State Bank and many other banks, you have the option to open a money market account. But what exactly is a money market account? The short answer is it’s a type of savings account that generally accrues more interest than other types of savings accounts. A money market account usually requires a much higher minimum balance as well.
With First State Bank, money market accounts earn interest, have low minimum balance fees and allow quick access to your cash. Essentially, a money market account serves as a savings account and is a great option for anyone looking to invest.
Is a Money Market Account Right for You?
The world of stocks and bonds is constantly in flux. Even Forbes acknowledges the unpredictable rise and fall of the stock market. So if you are new to the stocks and bonds game or are unsure about how it all works, a lower-risk money market account might be a good fit for you. Money market accounts have the potential to generate a low single-digit return, which may be attractive to you as an investor
If you are good at putting away money and letting it sit untouched in an account for a while, a money market account would be a good match for you. At First State Bank, our minimum balance to waive any fees is $2,500. If your balance falls below that amount, a fee of $16 will be applied once per payment cycle.
Are There Disadvantages to Money Market Accounts?
As we’ve said, money market accounts have the potential to earn great, competitive interest. However, if you are constantly losing money due to minimum balance fees, your net profit is likely to decrease.
It’s also important to consider the fact that inflation might hinder your account from growing. It really just depends on the interest rate of your account. Not to mention that even with single-digit returns, those returns may vary. Further, while the Federal Deposit Insurance Corporation (FDIC) might insure your money in this type of account, it’s important to know that government insurance is not guaranteed.
The Money Market Takeaway
Even the savviest investors can see their retirement or emergency funds dwindle if placed in the wrong account at the wrong time. Money market accounts are certainly a great option to save (and maybe even make) money, but be sure to meet with an advisor and consider all your options, just like you would for any other big financial move. If you decide you would like to open a money market account, we encourage you contact First State Bank; we’ll be more than happy to get you set up!