Money market accounts , also known as money market savings accounts, just might be the unsung heroes of personal finance. They have better interest rates than your usual savings account, and they don’t lock up your money the way other financial products like certificates of deposit can.
However, you also need at least $2,000 to open a money market account. This might make you wonder, are money market accounts worth it? The answer is yes, but you need to know when to open a money market account.
When should you open a money market account?
When You’re Saving for a Long-Term Financial Goal
Long term financial goals often require tens of thousands of dollars, if not hundreds. These can include:
- Buying a house
- Saving for retirement
- Funding your child's college education
- Starting a business
If you’re like most people, these kinds of goals will also require years of saving before you achieve them.
While you’re saving for these goals, you’ll want to store the money you’ve already earned in an account that has a high interest rate so you can take advantage of compound interest. You’ll also want an account that lets you deposit as much money toward your goal as you’d like. This makes money market accounts one of the best choices when you’re saving for a long-term financial goal.
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When you have a Substantial Emergency Fund
If you’ve been putting aside a percentage of your paycheck toward your emergency fund for a couple years, the odds are good that you have enough money saved to open a money market account. A money market account is actually ideal for an emergency fund, as it allows you to take advantage of the higher interest rate while still being able to access your money easily if you need it. Even better, since you ideally shouldn’t have to withdraw money from your emergency account often (or hopefully at all), you won’t have to worry about your account falling below the money market account's minimum required balance.
When you Get a Sizeable Windfall
If you’re fortunate enough to get a windfall of over $2,000, you can probably think of a lot of ways to put that money to good use. However, one of the best things you can do with that money is to open a money market account.
This might just be one of the best uses for a money market account, since you'll be able to take advantage of the high interest rate while you're putting together a plan for how you'll use the windfall. Best of all, you won't have to keep your money locked up to get that interest rate. You can take as much--or as little--time as you need to figure out how you'll use it.
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Take Advantage of a Money Market Account With First Alliance Credit Union
If you’ve built up your savings, whether it’s for an emergency fund or a financial goal, you should consider opening up a money market savings account. Its high rate of interest will increase the amount of money your money earns in the account, but you’ll still be able to access your money easily if you need it.
If you want to take advantage of a money market account, become a member of First Alliance Credit Union and talk with a member experience advisor. You’ll be able to start earning interest the first day, and you’ll be able to track your money market account’s progress using our online banking platform and mobile app!