One of the many types of accounts that we offer here at Somerville National Bank is a money market account. Despite having been around for quite some time now, a money market account is often considered to be one of the most misunderstood of all accounts.
Essentially, this type of account is ideal for those that are looking to deposit a very large amount of money safely and earn a high level of interest on that money.
This type of account offers the same degree of protection as a standard savings account, while offering a high interest rate earnings potential to its owner. In most instances, a money market account will have a much higher minimum balance requirement than standard savings accounts.
Throughout this guide, you will be provided with detailed information about money market accounts.
Regulation D and Its Impact on a Money Market Account
A money market account is governed by the Regulation D as outlined by the Federal Reserve. Regulation D is that which imposes various reserve requirements on certain types of deposits. It also places a variety of liabilities of the depository institutions. This is done for the purpose and intent of implementing a sound monetary policy associated with those deposits and institutions.
Basically, this means that the convenience-based transactions on your money market account – those that include the use of a debit card, an online transfer, and checks – are limited each month. In most instances, the limitation imposed is 6 or less per month; however, this is dependent upon the financial institution in which you obtain the money market account. Money market accounts are those that are officially backed by the Federal Deposit Insurance Company when made available at a bank for up to $250,000 for each depositor.
When is it Ideal to Choose a Money Market Account?
If you are searching for quick financial gains, you should not consider a money market account as an ideal option. The same holds true for a standard checking account, a regular savings account, and CDs; however, if you want any of the following, a money market account will be an ideal option for you:
- If you enjoy and prefer the safety offered by a bank
- You would like to have a higher interest rate
- You need access to the money quickly
- If you would like the ability to write a few checks when they are needed
In today’s world, many use a money market account as a type of emergency fund account. When opting for a money market account, you should opt for those that include low minimum balances, high yields, and the access that you desire. While this type of account does, in fact, have some limitations in place, it is a wonderful and safe place to place your money so that it grows in a steady and safe environment.
If you are interested in bypassing the limited growth rate of a traditional savings account, you should opt for a money market account.