When you hear the words bank account, you may think of two things: achecking accountand asavings account.
But heres a different option you may not have heard of: money market accounts.
What Is a Money Market Account?
A money market account is like a cross between a savings account and checking account.
Its like a savings account in that its primary purpose is to, well… save money.
A money market account typically earns more interest than a typicalsavings or checking account.
Money market accounts also tend to have higher minimum balances.
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You may be thinking that a money market account sounds a lot like acertificate of deposit (CD).
There are a couple key differences, though.
So if you open a five-year CD, you arent meant to withdraw that money for five years.
Read carefully before deciding if this account is for you.
The Cons of Money Market Accounts
There are several disadvantages of money market accounts.
They include:
This includes both withdrawals and deposits.
This rule could be a blessing in disguise if it keeps you from spending away your savings.
However, you should still know that you cant spend as easily as you would with a checking account.
Plenty of banks allow you to open a money market account with little to no money.
You wont earn much interest.
Once you hit $10,000, Capital One bumps that APY up to 2%.
Should I Open a Money Market Account?
Thats why a money market account is a great option for your emergency fund.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
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