Everyone wants to make more money out of the money we already have. One of the best ways to do this is by putting money into some kind of savings account. One of the best savings accounts out there is a Money Market account. So, what is a money market account? Well, the best way to explain that is by giving a small review of some banking terms.
We all know what a Savings account is, it’s where we put money into an account or share, and that money is saved for something else. The money that is put into an account, earns interest, and we get the money earned paid back to us. Usually one will see an interest deposit in their account at the end of the month. The money is protected by FDIC, or Federal Deposit Insurance Corporation. The FDIC protects your money even if the bank or credit union goes out of business, which most likely will never happen. With most savings accounts you can only make six (6) withdrawals a month without having to pay any penalties.
Checking accounts are where we have our funds that will most likely be used for everyday life. With a checking account, you get your designer checks, and a Debit/ATM card where you can access you money and have it for quick access to your funds, or to pay bills. Most checking accounts do not earn interest, but some do all depending on the type of accounts your financial institution offers. Many checking accounts are referred to as draft accounts because you do make frequent withdrawals from the account.
Then there are other type of savings accounts such as Money Market accounts, Individual Retirement Plans (IRA’s), and Certificates of Deposits (CD’s). There are other products offered by backs and credit unions, and they all have different policies that go along with the products. To find out about these policies ask a represent about them.
I would like to focus a little more on what a money account is. A money market account is a type of savings account, but with a little spice added to it. Money market accounts usually ask for a minimum deposit that can range from one dollar to two thousand five hundred, all depending on the bank. The money market will pay you more interest, so expect to see your money make a larger return. Having a money market is nice so you can put large amounts of money into an account and receive the interest that is compounded daily and paid monthly. Or you get paid a percentage of money daily and see that money earned put into your account once a month.
Another convenience of most money market accounts is that you can write three (3) checks off of it in a month’s time, and you can take it out when ever you want to without receiving any penalties. Being that money market accounts are a form of savings accounts, they usually have a limit of withdrawals one can make, but there are unlimited deposits. So, what happens to your money when you put it into your money market account? Well, the financial institution will take that money, and lend it to other customers. The loans are paid back at a higher interest, and that is where they get the money to pay you.
Having a money market account is one the most convent ways to have your money that you aren’t willing to lock up gain interest. Most financial institutions offer on-line banking, so it’s easy to access your account via the internet, and one can even open their account on-line so they can have the comfort of managing their accounts at home. Having a money market account can be fun and an educational tool for anyone who is interested in earning a little more on their dollar.
What is the difference between a money market account and a Money market mutual fund?
A lot of folks sign up to ING Direct to get the $25 signup bonus (email me if you want the referral link, you get $25 and I get $10) but then hesitate to sign up for the 4.0% that Emigrant offers because they don’t want to withdraw money from ING to their account and then send it over to Emigrant. Well, the solution is presented quite elegantly (and less verbose than I have below) by MyMoneyBlog. What you need to do is open an account at both ING Direct and Emigrant, make the required deposits, and then supply ING with the details so you can link the two accounts.
1. Once both accounts are open, write down the account number from your Emigrant Direct account.
2. Then login to your ING account, click on “click here” where it states: “For information on your Externally Linked Accounts click here” at the top of the screen.
3. Click on the “Add Link” button
4. It should show you a picture of a check and three boxes, a gray box, and orange box, and a blue box. Into the gray box enter “Emigrant Savings Bank.” Into the orange box enter “226070319.” And finally, into the blue box, enter your Emigrant Direct account number.
5. Within a few days (for me it was three), there should be two small deposits into your Emigrant Direct account: write these down.
6. Login to your ING Direct account. A popup window should appear telling you that you linked an account and that your services will be limited until you confirm the two small deposits, click on the orange text “Confirm.”
7. A window should appear giving you two boxes to enter the two small deposits, enter them.
8. Once you complete all the steps, the Emigrant account will be linked just as your other account is and you have the freedom to transfer between the two as you please!
The best strategy is to get someone who already has an account to send you a referral email and you’ll get $25 (and they get $10). After it clears, open an Emigrant Direct account, link the two, and transfer all but $1.00 from ING to Emigrant Direct. If ING tops the 4.0% interest, then transfer it back. No need to use another account as a middleman (and waste time). Hope that helps and again, kudos to MyMoneyBlog for figuring this out.