If you’re focused on saving, you’re probably on the lookout for the ideal way to leverage the money you already have in reserve. While a savings account serves as a place to hold emergency funds, the relatively low annual percentage yield (APY) doesn’t exactly make for the best return on your investment. There’s another option that typically provides a higher APY: a money market account.
A money market account is an interest-bearing resource that acts like a savings account but provides the account holder a better return on investment. At credit unions, the accounts are insured by the National Credit Union Administration (NCUA), and, while a savings account APY can be as low as 0.01 percent, the average money market account is currently around 0.18 percent.* That rate can be as high as two percent if you shop around.
If you have surplus funds and you’re looking for ways to get more bang for your buck, consider a money market account. It can be a great way to invest, but there are a few key factors to be aware of.
Higher Minimum Deposit
Every financial institution’s money market account carries a different minimum deposit, but on average, more initial cash is required to open a money market account than a savings account. Minimums can range from $100 to $50,000 depending on the perks and benefits of the account. Do your research and look around. A lower minimum may look attractive, but you could be sacrificing a higher yield.