High yield money market accounts provide investors with a way to set aside money for emergency needs and to earn a higher interest rate than you will get with a traditional savings account. In the past the interest rates on high yield money market accounts were close to 5% but now it is hard to find anything that is close to 2% as most are less than 1.5% or even 1%. Comparing current money market rates will help you to see what type of options you have and how much the interest rate’s currently are.
Chapter 1. Interest Rate
The interest rate is the driving factor for most investors that are looking to compare money market accounts. A 1% interest on a high yield money market account will give you a much higher chance to earn than one that is half this. One thing to remember as you do research the interest rates is to consider what the fees are. The fees for the account may end up negating the interest rate altogether so you do need to be very particular in choosing the right account.
Chapter 2. Fluctuation
Just when you think you are ready to open a money market account you may find that the interest rate drops the next day or within a week. The interest rates are controlled by the Fed and when there are concerns over economic uncertainty, it can cause the interest rates to fluctuate. The fluctuations in the interest rates are completely normal so you need to prepare yourself for them and do not overreact by sending the request for a withdrawal of your money right away. Even though the interest rates on money market accounts and just about any savings account out there are pretty low, it is important to remember that this is just a temporary thing. As the economy recovers and credit activity starts to increase, the interest rates will rise and individuals that have invested in money market savings accounts will be properly rewarded for it.
Chapter 3. Top Money Market Accounts
When it comes to finding the top money market accounts that will work well for your situation you need to do your research. Use a comparison chart in order to see the current money market rates along with fees and initial balance needs to open the account. High yield money market accounts in 2011 have changed daily and you can see some banks that will be on the higher end suddenly drop to the lower end of the interest rate totem pole.
Chapter 4. Priorities
As an investor it is important to set aside some investment goals for a money market account. What is the purpose for the account? Will you use it as a short-term or long-term investment vehicle? As you compare rates on the top money market accounts you must consider the following:
- How accessible is the account?
- When will my money be available for withdrawal?
- Is there a limit to how many withdrawals I can make?
- Is there a fee for opening and maintaining the account? What about a termination fee?
- Does the bank have a minimum balance requirement?