Money market accounts are great options for consumers who are interested in building up an emergency fund, vacation savings account, or just want to save for the future. The interest rates are typically similar to those of other savings accounts, but for some people, the specific advantages of money market accounts meet their needs perfectly.
If you’re planning for retirement, a money market account is a great supplement to a Roth IRA or 401(k). Once you’ve contributed as much as your employer will match, consider putting the extra into a money market account. In this case, the easy access is the real perk. If you run into an emergency, it’s easy to get quick cash from your money market account. This is really helpful in the case of unexpected health care expenses or home repairs that you may not have figured into your pre-retirement savings budget. If you don’t have to use the money, then it’s still there, collecting interest for you.
As a college student, you usually don’t have a lot of income. That makes it really difficult to set aside money into savings accounts, where you want it to collect interest, but you can’t guarantee that you won’t need the money. A money market account can give you the flexible middle ground between a checking account (where you aren’t really saving money at all), and a savings account or certificate of deposit account (where you can’t access your money all that easily). A money market account lets you make six transactions, but many offer unlimited deposits and ATM withdrawals. The key for students? An account that doesn’t require a minimum deposit amount since you probably don’t have a cool 10 grand on hand.
Maybe a wealthy relative just died or maybe you got a bonus check at work. Whatever happened, you’ve found yourself with a large sum of extra money. You are likely looking at investing some of it, but maybe you’d like to keep some aside as an emergency fund. If you deposit it into a money market savings account, then you can still earn interest on the sum while keeping it in a no-risk, easy-to-access account. You never know when you may need some quick change!
You love to go jet-setting across the globe? With some savvy-saving, you can travel more than ever! Money market accounts are great for this type of saving because you are allowed unlimited deposits to the account. Found an extra $20 on the sidewalk? Better put that toward your summer adventure to the Amazon! You can also still use the money for purchases, so when it comes time to reserve your hotel room or buy your plane ticket you’re not stuck scrambling.
When you’re looking to open a money market account, for whatever reason, it’s always a good idea to shop around. Look for accounts with high interest rates, low fees, and a manageable minimum deposit.