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Money market accounts (MMAs) are a good option if you prefer account flexibility, as well as the chance to earn higher interest rates than those typically found offered by traditional savings accounts. Average MMA rates have inched up from last week, per Curinos data, and deliver decent yields to those wanting a balance between liquidity and competitive returns.
The highest rate in the Curinos dataset sits at 5.12%, so you may be able to find higher rates in your own research.
If you were to invest $10,000 into an MMA with a 5.12% interest rate that compounds daily, you would earn more than $520 in interest over a year, assuming no withdrawals or additional contributions are made.
Keep in mind that savings accounts are better suited to achieve a particular goal, such as maintaining an emergency fund or amassing a down payment on a home. By placing your funds in a high-yield savings account , you'll earn interest and you'll hopefully also be less inclined to spend the money.
Think of a money market account as a mixture between a savings and checking account , often offering competitive interest rates and typically requiring a higher minimum balance. You can enjoy the perks of a high-yield savings account while having access to a debit card and check-writing, all with FDIC insurance up to $250,000. Though not designed for everyday spending, these accounts provide some flexibility with limited transactions.
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