With the downturn of the economy we are seeing more and more people starting to save money. There are several instruments you can use to save money depending on what your goals and objectives are. If you want to earn a high rate of return on your money then you may want to consider money market accounts.
With you money market account you are paid a higher rate of interest than you would receive with a saving account. Your money will actually grow a lot faster.
If you decide to open a money market account your will notice that the opening deposit is going to be a lot more than you would need for a savings account. Some banks will require an opening balance of $1,000 or $2,500. With a savings account the opening balance is probably going to be somewhere in the area of $50 to $100.
With a money market account you can write three checks per month even though these are not checking accounts. This is another feature that distinguishes them from savings accounts.
You are limited with the number of transactions that you can perform on a monthly basis with money market accounts. That number is usually around 6 withdrawals per month and some banks will count your 3 checks as three of those transactions. If you go over the allotted number of transactions you could be subject to a fee.
When you open a money market account your money is safe. The FDIC insures your money up to $250,000 per depositor per account. This amount of insurance can be even more when you consider the ownership of the account. If you are not sure about the amount of insurance always check with your bank. The insurance of $250,000 is good through December 31, 2009 after that it will revert back to the original amount of $100,000.
You can also access your money by going to an ATM. Depending on the bank ATM transactions may or may not count towards the number of transactions that you are allowed to perform during the course of a month.
Money market accounts also have a minimum balance requirement which could be lower than the opening balance. If you go below your minimum balance your account may stop paying interest and you may be subject to a fee. It’s always a good idea to check with your bank to see how they operate. Different banks may have different terms and requirements when it comes to money market accounts. They also have different interest rates.
Source: : http://money.howstuffworks.com/personal-finance/financial-planning/money-market-accounts.htm