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Money markets combine the benefits of both savings and checking accounts. They’re versatile options that nearly all savers should consider exploring with their local bank or credit union. Use the following information to decide whether opening one is right for your financial situation. 

How Money Market Accounts Benefit Savers

How Money Markets Work

While conventional savings accounts do accrue interest, the amount earned tends to be negligible. Money market accounts offer much higher interest rates – sometimes up to 1%, depending on the bank or credit union and how much money you place into an account. This is because money within these accounts is invested in low-risk vehicles, unlike savings accounts, where money is mainly held waiting to be used.

credit unionThe higher interest rate typically also comes with a higher deposit. Many banks and credit unions ask for $10,000 or more, though some institutions charge as little as $1 to open an account. Money market accounts are especially useful for people with large sums of money they’d still like to be able to access. 

How Other Investment Options Compare

If you’re looking for the highest returns when it comes to interest rates, a certificate of deposit (CD) is another option to consider. However, CDs have a few drawbacks, such as reduced liquidity. Liquidity is the availability of your money. With a traditional checking account, for example, you’re able to access your money immediately without incurring a penalty. By contrast, if you withdraw funds from a CD early, you’ll likely incur penalties, including a decreased interest rate on your remaining balance.

A money market doesn’t have this downside. While you won’t have unfettered access to your cash, you’re able to make a fixed number of withdrawals over the course of a month – usually up to six or so. If you have a debit card linked to your account, you’re able to use that up to six times per month. Money markets thus give you high rewards and greater flexibility. 

 

If you’re interested in opening a money market account in Totowa, NJ, North Jersey Federal Credit Union is here to help. With more than eight decades of experience, these financial professionals assist with everything from applying for a car loan to opening your very first checking account. Because you’re a member and not just a customer, this credit union will go above and beyond to give you quality service and low fees. If you’d like more information on opening an account, feel free to call (973) 785-9200 today. Visit them online to see their full listing of services.

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