Money Market Questions

If you’ve ever found yourself wondering whether a Money Market account is right for you, you’re not alone. A Money Market is a special type of savings account. The more money you contribute, the higher the dividends.

However, these accounts aren’t ideal for everyone’s financial situation. As someone who sees the impact of having the right financial products firsthand, I know that opening the right account is a key step in meeting your financial goals. Before applying for a Money Market, here are some questions to consider.

How Much Money Am I Putting into This Account? 

A Money Market account is ideal if you plan on saving a sum of money. Alltru’s Money Market requires a minimum balance of $250. If you start with less money, it is best to either move money from another account to reach the minimum balance or to open a different type of account. This is because you can earn more in interest with a different account. Once you reach certain thresholds in your account, your interest rate increases. This earns you more money as a reward for saving.

Will I Need to Access This Money Regularly? 

Some accounts restrict your access to the funds or may charge a penalty for early withdrawal. Fortunately, the money in your Money Market is always accessible. You can access your funds through digital banking or by visiting a branch. But since you can earn a higher return with a larger balance, many people contribute to this account instead of withdrawing from it.

What’s the Best Way to Use a Money Market Account? 

This account is a great financial tool that you can use in diverse ways. Some people use this as their emergency fund and only use the money when necessary. Others use this account to supplement their retirement savings since typical retirement accounts only allow accountholders to contribute a certain amount each year. No matter how you use the account, your account is federally insured by the NCUA up to $250,000.

What’s the Difference Between a Money Market Account and a Money Market Fund?

There are a few major differences between a Money Market Account and a Money Market Fund. First, a Money Market Account is a bank account, while a Money Market Fund is an investment account. Second, a Money Market Account has a set interest rate, so you know how your money will grow while in the account. A Money Market Fund doesn’t have a set interest rate. Instead, the returns are based on the underlying investments in the fund. Finally, Money Market Accounts at credit unions are federally insured by the NCUA up to $250,000. However, the money in a Money Market Fund isn’t federally insured, which makes it a riskier investment.

Should I Open a Money Market or a Different Type of Savings Account? 

While Money Market accounts can be used in diverse ways, a different account could be a better option. If you plan on saving a large amount for an indefinite period, a Money Market is a great option. If you plan to move money into different accounts regularly, this might not be an ideal account. Keep in mind that you must maintain a $250 minimum balance in a Money Market account to avoid a monthly fee.

How Does a Money Market Account Compare to Other Accounts?

Here’s a chart to help you visually compare a Money Market to other types of accounts. This can help you determine which account is the best option based on how much money you’re starting with and your future goals.

Which Account is Right for Me?

If you still have trouble deciding whether a Money Market is the right account for you, make an appointment with Alltru. Our financial counselors can help answer your Money Market questions, evaluate your situation, and suggest which product will meet your needs. If you already know which account you want to open, you can apply online or visit a branch.