A money market account is a great way to save up money and gather more interest on it than you will with a traditional savings account. Money market accounts offer a great advantage as the interest rate often pays about 3 times higher from a traditional savings account, allowing you to earn more money as long as you continue to contribute. Money market account interest rates are subject to change at any time, which is why it is important to research the best rates and find one that will pay you the most amount of money possible.
What is a money market?
For anyone hoping to build up savings, a money market account is by far one of the best investment programs to use. There are very few restrictions on the account, usually pertaining to the amount of withdrawals that you can make per month. However anyone that just wants to put money aside and leave it there will benefit greatly from the money market account. High yield money market accounts will offer higher premiums if you make a large initial deposit and continue to keep a large balance in the account. Compared to CDs and traditional savings accounts, the interest you can earn is quite rewarding.
Why you need to contribute
As you focus on building a savings it is vital that you create a savings plan for yourself. You must continue to contribute to the money market account if you expect to earn a lot of money in interest. Simply depositing $100 and leaving it in an account for a year will not earn you much money in interest. The best way to earn a lot of interest money is to contribute monthly and to limit your withdrawals from the account. Most online money market accounts will provide you with direct deposit programs allowing you to automatically transfer the money over to your account.
Set a Goal
When it comes to money market savings accounts establish a goal for your short-term and long-term needs. Having a goal in mind will make it easier for you to stay focused on depositing money into the account and will also give you a timetable as to how soon you will be able to reach these goals. To create a savings goal you need to start by taking your monthly income and times it by 3. Then you have a figure to save for short-term needs in the event that you lose your job, you will have 3 months pay to fall back on. Your next goal needs to include future needs and emergencies such as the cost of your auto insurance premium that you will need to pay if you get into an auto accident.
One of the greatest benefits to using an online money market account is how easy it is to save and build up a large sum of money. Once your money market account reaches a certain point, say $10,000, you can then take this sum of money and invest it into other things that may offer you higher rewards. Do your research and find out what the current money market rates are in order to open an account with the right company and to give yourself a chance to really earn a great deal of interest income.
