If you’re looking for a new bank account that allows you to easily store as well as access your cash, you might be thinking about opening a money market account or checking account. But how do you know which to choose? Decisions, decisions. Both types of accounts have unique advantages, depending on your savings and spending goals.
âThink about how you will be using the money within the account,” says Jill Emanuel, lead financial coach at Fiscal Fitness. “Is this money for daily, weekly or monthly use? Or is it money that will not be needed regularly?”
You’ll probably need a little more to go on before answering the question, “How do I decide between a money market account or checking account?” No worries. Our roundup delves into the features of both types of accounts to help you determine which one could be right for your financial plans, or if there’s room for both in your money mix.
Get easy access to your funds with a checking account
In simple terms, a checking account allows you to write checks and make purchases with a debit card from the money you deposit into the account. That debit card can also be used to withdraw cash from the account via an ATM.
When deciding between a money market account or checking account, Emanuel says most people use a checking account for the primary management of their monthly income (i.e., where a portion of your paycheck is deposited) and daily expenses (often small and frequent transactions). âA checking account makes the most sense as the account where the majority of your transactions occur,” she adds. This is because a checking account typically comes with an unlimited number of transactionsâwhether you’re withdrawing cash from an ATM, transferring money to a savings account or swiping your debit card.
While a checking account is a good home base for your finances and a go-to if you need to easily and quickly access your funds, this account type typically earns little to no interest. Spoiler: This is one key difference when you compare a money market account vs. a checking account.
.block-quote_100back background-image: url(https://865cd2fc18498405a75a-f8cbe8cb758c89f0cd738fe08520ecb9.ssl.cf5.rackcdn.com/online-banking/banking-topics/wp-content/uploads/2017/09/100back-730×500.jpg); @media (min-width: 730px) .block-quote_100back background-image: url(https://865cd2fc18498405a75a-f8cbe8cb758c89f0cd738fe08520ecb9.ssl.cf5.rackcdn.com/online-banking/banking-topics/wp-content/uploads/2017/09/100back-1600×600.jpg);
âIf you plan to use your account for monthly bill payments and day-to-day transactions, you would be better suited with a checking account, as these support daily and frequent use.â
Grow your balance with a money market account
When you’re comparing a money market account vs. a checking account, think of a money market account as a savings vehicle that allows you to earn interest on the balance you keep in the account.
“A money market account is an interest-bearing bank account that typically has a higher interest rate than a checking account,” says Bola Sokunbi, certified financial education instructor and founder of Clever Girl Finance.
With some money market accounts, you can even earn more interest with a higher balance. Thanks to its interest-earning potential, a money market account can be the way to go if you’re looking for an account to help you reach your savings goals and priorities.
If you’re deciding between a money market account or checking account, you may think that a money market account seems like a typical savings account with your ability to earn, but it also has some features similar to a checking account. With a money market account, for example, you can withdraw cash from an ATM and use a debit card or checks to access money from the account. There are no limits on ATM withdrawals or official checks mailed to you.
Before you decide to use this account for your regular bills and your morning caffeine habit, know that federal law limits certain types of withdrawals and transfers from money market accounts to a combined total of six per calendar month per account. If you go over these limitations on more than an occasional basis, your financial institution may choose to close the account.
Don’t need regular access to your funds and want your money to grow until you do need it? Then the benefits of a money market account could be for you.
Deciding between a money market account or checking account
Still debating money market account or checking account? Here are some financial scenarios to help you determine which account may best suit your current needs and goals:
Go with a checking account if…
- You want to keep your funds liquid. If you’re thinking money market account or checking account, know that a checking account is built for very regular access to your funds. âIf you plan to use your account for monthly bill payments and day-to-day transactions, you would be better suited with a checking account, as these support daily and frequent use,” Sokunbi says. Think rent, cable, utilities, groceries, gas, maybe that morning caffeine craving. You get the idea.
- You want to earn rewards for your spending. When you’re comparing money market account vs. checking account, consider that with some checking accountsâlike Discover Cashback Debitâyou can earn cash back for your debit card purchases. The best part is you are earning cash back as you keep up with your regular expensesâno hoops to jump through or extra account activity needed. Then put that cashback toward fun things like date night, lunch at your favorite spot or a savings fund dedicated to something special.
.shortcode-insert margin-bottom: 30px;
- You want to deposit and withdraw without the stress of a balance requirement. If you do your research when comparing money market accounts vs. checking accounts, you’ll find that some checking accounts don’t require a minimum balance (or much of one). However, you may be required to maintain a minimum balance (and potentially a higher one) with a money market account in order to avoid a fee. If you’re accessing your money frequently and need to make large withdrawals, a checking account with no minimum balance requirement is a convenient option.
Go with a money market account if…
- You want to earn interest. âIf your money is just sitting there, it should be earning money,” Emanuel says of the money market account or checking account question. âI spoke with a woman recently who told me she’d had around $50,000 sitting in her checking account for at least the last 10 years, if not longer. If that money had been in a money market account for the same period of time, she would have earned thousands of dollars on it. Instead she earned nothing,” Emanuel says.
- You want to put short-term savings in a different account. If you have some short-term savings goals in mind (way to go!), you may benefit from keeping your savings separate from your more transactional checking account so you don’t dip into them for a different purpose. That whole out of sight, out of mind thing. âA money market account is the perfect place for money that will be accessed less frequently, such as an emergency fund [a.k.a. rainy day fund], a vacation fund or a place to park money after you’ve received an inheritance or proceeds from selling a home,” Emanuel says.
- You need an account to fund your overdraft protection. If you’re comparing money market account vs. checking account, consider that a money market account could also cross over to support spending goals. One way is in the form of overdraft protection. If you enroll in overdraft protection for your checking account, for example, you could designate that funds be pulled from your money market account to cover a balance shortfall.
.block-quote_1back background-image: url(https://865cd2fc18498405a75a-f8cbe8cb758c89f0cd738fe08520ecb9.ssl.cf5.rackcdn.com/online-banking/banking-topics/wp-content/uploads/2017/09/1back-730×500.jpg); @media (min-width: 730px) .block-quote_1back background-image: url(https://865cd2fc18498405a75a-f8cbe8cb758c89f0cd738fe08520ecb9.ssl.cf5.rackcdn.com/online-banking/banking-topics/wp-content/uploads/2017/09/1back-1600×600.jpg);
âA money market account is the perfect place for money that will be accessed less frequently, such as an emergency fund [a.k.a. rainy day fund], a vacation fund or a place to park money after you’ve received an inheritanceÂ or proceeds from selling a home.â
Using both accounts to achieve your financial goals
Speaking of crossover. Both spending and saving are vying for your attention, right? Consider leveraging both types of accounts if you have needs from the checking and money market account lists above.
“Personally, I use my checking account for bill payments, my day-to-day spending, writing checks and for any automatic debits I have each month,” Sokunbi says. She’s added a money market account to the mix “because of the higher interest rateâto store my savings for short-term goals, for investing or for money I’ll be needing soon,” she explains. Maybe it’s not about deciding between a money market account or a checking account, but getting the best of both worlds.
Before opening a money market account or checking account, do your research and compare your options to see which bank offers the best package of low or no fees and customer service, in addition to what you need from an interest and access to cash perspective.
The post Money Market Account or Checking Account: Which Is Best For You? appeared first on Discover Bank – Banking Topics Blog.
Saving money in a place like a money market account can assure that the money will be there safely when you need it. A money market account is an alternative to savings account, and usually pays more interest rate than a savings account.
See, Money Market Vs. Savings Accounts: What’s The Difference.
Overall, money market accounts are worth it, especially if you’re saving for a short-term goal. However, like any investments, there are some disadvantages to money market accounts.
In this article we will address three main things: what is a money market account and what are the advantages and disadvantages of money market accounts.
|*TOP CIT BANK PROMOTIONS*|
|CIT Bank Money Market||1.00% APY||Review|
|CIT Bank Savings Builder||0.95% APY||Review|
|CIT Bank CDs||0.75% APY 1 Year CD Term||Review|
|CIT Bank No Penalty CD||0.75% APY||Review|
What is a money market account?
Before we get to the advantages and disadvantages of money market accounts, it’s best to define what a money market account is.
A money market account is an interest bearing account that you can open at a bank or credit union. It is more like a savings account, though there are some key differences.
Money Market Accounts Advantages and Disadvantages.
Let us consider the advantages of money market accounts.
Interest rate: The main benefit of a money market account is that the interest rate is much higher than that of a regular savings account. For example, CIT bank offers a money market account with 1.00% APY. Whereas the interest rate for a typical savings account is anywhere around 0.10%. MMAs interest rates are similar to those of certificate of deposits. The main difference, however, with a CD you earn a fixed interest for a fixed amount of time. And CD rates are higher than MMAs. And a penalty may apply if you withdraw your money early.
FDIC Insured. One of the benefits of money market accounts is that they are FDIC insured. Your money is secured by the federal government of up to $250,000. If you have more money than that, then you will need to open another account so all of your money can be protected.
To recap, money market accounts are FDIC insured, they offer higher interest rates than savings accounts, and they permit check writing privileges. Despite these many advantages, money markets also have disadvantages.
What are the disadvantages of a money market account?
Minimum balance: Most money market accounts require a minimum deposit account of $1,000. Although, that’s not a big amount, it may not be feasible for a young saver. Plus, a penalty will apply if your balance falls below the minimum requirement.
Limited check writing: While MMAs offer check writing privileges, there is a limit. With a money market account, you can only write six checks per month against your balance, which can be a disadvantage if you pay a lot of bills every month. So, money market accounts are a disadvantage for those who need to write more than six checks per month.
Account fees: Another disadvantage of money market accounts is the fee. If you donât maintain the required minimum balance, a fee will apply. So, maintaining the minimum balance is important because any fee will eat out your interest or earnings.
Taxes: Taxes are another disadvantage of money market accounts. You will pay taxes on whatever interest you earn in a MMA.
Inflation: just like taxes and account fees can reduce your interest, inflation can do the same thing. Let’s suppose you generate a 3% return on your money market account per year, and the inflation is 4%. That can impact your total return significantly.
Best Money Market Accounts
CIT Bank Money Market Account
The CIT Bank money market account is one of the best ones out there. Currently, the money market account offers a 1.0% APY.
This is very competitive comparing to other MMAs. Moreover, CIT Bankâs MMA has a required account minimum of only $100.
Open a CIT Bank Money Market Account.
While money market accounts offer several benefits, there are disadvantages as well. The main disadvantages are that the minimum balance can be high for a young investor. Moreover, taxes and account fees can eat away whatever interest you might earn.
- 7 Best Short-Term Bonds to Buy in 2020
- Vanguard CD Rates: How Much Can You Earn
- Grow Your Money: Mutual Funds & CDs
Speak with the Right Financial Advisor
- If you have questions about your finances, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).
- Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
|*TOP CIT BANK PROMOTIONS*|
|CIT Bank Money Market||1.00% APY||Review|
|CIT Bank Savings Builder||0.95% APY||Review|
|CIT Bank CDs||0.75% APY 1 Year CD Term||Review|
|CIT Bank No Penalty CD||0.75% APY||Review|
The post Advantages And Disadvantages of Money Market Accounts appeared first on GrowthRapidly.
***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.
1. Make A Realistic Budget And Stick To It
Whatever your financial goals are this year, we know you can achieve them! Hereâs to making 2021 your best financial year yet.
Itâs easy to get swept up in the joy that is payday and immediately start buying things you donât need. But as the final financial resolution on this list, paying your bills right away can help keep the rest of your goals on track.
Talk about a scary year. If a global pandemic didnât have you thinking about your own mortality, what else could? With that thought in mind, people are adding âbuy life insuranceâ to their list of 2021 to-dos.
2. Look For A Better Job: Make up to $69/Hour
Those are the perks of working as a bookkeeper, says Ben Robinson, a CPA and business owner who teaches others to become virtual bookkeepers through online courses called Bookkeepers.com.
50% of your take-home income every month covers your fixed expenses â rent, utilities, groceries, minimum debt payments, etc. 30% goes towards the things you can live without, but donât want to (like food delivery, a Netflix subscription and travel). Finally, the last 20% of your monthly income is dedicated to your financial goals.
Have you made your resolutions yet? It can feel a little daunting trying to figure out what you need to focus on, so we made it easy: These are the resolutions everyone else is taking on in 2021, according to a survey by Wallethub, and you should, too. Plus â how to accomplish them.
AmOne wonât make you stand in line or call your bank, either. And if youâre worried you wonât qualify, itâs free to check online. It takes just two minutes, and it could help you pay off your debt years faster.
The most surefire way to achieve your financial resolutions and stay within that budget you made is to earn more money.
Rates start at just a month. The peace of mind knowing your family is taken care of is priceless.
Want to check for yourself? Itâs free and only takes about 90 seconds to sign up.
You can make up to an hour, according to data from Intuit, the creator of QuickBooks, and you have no commute. Itâs a great opportunity for parents who want a part-time job, recent college grads or anyone who wants to bring in real money working from home.
3. Pay Off Credit Card Debt: Wipe Out All Your Debt by Tomorrow
So prioritize your emergency fund this year. If you donât have one yet, start by opening an account that will help you grow your money.
Enter your email address here to get a free Aspiration Spend and Save account. After you confirm your email, securely link your bank account so they can start helping you get extra cash. Your money is FDIC insured and they use a military-grade encryption which is nerd talk for âthis is totally safe.â
So if youâre looking to get your credit score back on track â or even if it is on track and you want to bump it up â try using a free website called Credit Sesame.
James Cooper, of Atlanta, used Credit Sesame to raise his credit score nearly 300 points in six months.*** âThey showed me the ins and outs â how to dot the Iâs and cross the Tâs,â he said.
Did your credit score take a dive this year? Or is still stuck at a âfairâ grade? Then monitoring any changes on your credit reporting and working to improve your score should be one of your financial resolutions for this year, too.
2020 made that really hard for most people. Which is why finding a better job, that you actually enjoy â and will pay you more â is a top resolution for 2021.
4. Monitor Your Credit Report
Youâre probably thinking: I donât have the time or money for that. But your application can take minutes â and you could leave your family up to million with a company called Bestow.
You donât have to be an accountant or even really good at math to be successful in this business. In fact, all you need are decent computer skills and a passion for helping business owners tackle real-world problems. The ability to stay moderately organized is helpful, too.
The benefit? Youâll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), youâll get out of debt that much faster. Plus: No credit card payment this month.
We recommend the 50/30/20 method. Itâs simple, yet effective, and has a bit of a cult following, too! Hereâs how it shakes out:
If youâre under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.
Have you thought about how your family would manage without your income if something happened to you? How theyâll pay the bills? Send the kids through school? Nowâs a good time to start planning for the future by looking into a term life insurance policy.
5. Get Insured In Case Of A Catastrophe. You Could Give Your Family up to $1 Million
Not too shabby!
Kari Faber is a staff writer at The Penny Hoarder.
It means you can avoid late fees on your utilities, which can really add up and destroy your budget. You can pay off your credit card debt without mounting interest charges. And you can prevent any hiccups that would dock your credit score a few points.
One way to do that is with a company called Aspiration. It lets you earn up to 16 times the average interest on the money in your account.
Robinson shares what it takes to be a virtual bookkeeper, plus tips for making this career work for you in his free class at Bookkeepers.com. If you stick with the classes, you could be running your own business in just a few months.
6. Add A Month To Your Emergency Fund
Itâs easy to slip away from our good financial habits as the year goes on, so itâs particularly important to find a budgeting system that works for your lifestyle and wonât be hard to maintain.
Having an emergency fund is important; you know that. But itâs easy to deprioritize it when things are going fine. And as 2020 showed us, you can lose your job at the drop of a hat, meaning a full emergency fund can be what keeps your lights on.
And the truth is, your credit card company doesnât really care. Itâs just getting rich by ripping you off with high interest rates. But a website called AmOne wants to help.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
This one sounds familiar, right? Oft-regarded as Old Faithful when it comes to New Yearsâ resolutions, it holds that title for good reason. Having a budget you can actually stick to will set you up for financial success, no matter what your goals are.
7. Pay Bills Right After Payday
If you owe your credit card companies ,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.
Can you open an excel spreadsheet? Does earning an hour sound appealing? How about the freedom to work remotely while helping others succeed?
2020 was actually a good year for paying down credit card debt â Americans did more of it this year than they ever have.
But what if you could create that higher-paying and more rewarding job? Thereâs an ideaâ¦
But thereâs still work to be done, which is why paying off credit card debt is one of the top financial resolutions this year.Â Because if you still have credit card debt, you know. The anxiety, the interest rates, the fear youâre never going to escapeâ¦
When it comes to your credit score, itâs important to stay organized and keep tabs on it. After all, itâll play an essential role in any big purchase you want to make â whether thatâs a home or a car.
Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.
Within two minutes, youâll get access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. Youâll even be able to spot any errors holding you back (one in five reports have one).