Accounts offered by banks and other financial institutions to the individuals to save their hard-earned money as savings are termed as Money market accounts. The savings are usually kept with these financial institutions for a certain period like for one year or two to secure their money. But, these best money market accounts that keep the earnings of the individuals safe also have several advantages and disadvantages. Just have a look to some of them:
All these accounts are normally insured to a certain extent with Federal Deposit Insurance Corporation. If in any case, there is any problem with the financial institution, the depositor is usually free from any type of money loss. So, the deposit in this type of account is totally safe as compared to stocks and mutual funds.
2. Minimum transaction:
Maintenance of minimum balance is the next big disadvantage of money market account as the deposit has to maintain the minimum balance in the account which is very high as compared to the minimum account balance of savings account.
3. Maintenance fees:
The depositor has to pay the maintenance fees if in case you have not maintained the required balance in the account. If there is any type of failure in the minimum required balance, then you have to pay the required fee. It is important to mention here that depositor doesn’t have to pay any type of fee to these financial institutions for managing their accounts.
These market accounts are easily accessible by the account holder which is definitely an advantage. They can also be termed as the account that is highly liquid, it means you can easily withdraw the money whenever you need. But this scenario is not feasible with a certificate of deposits that carry a maturity date. But the disadvantage with the market account is that the deposits are not that much liquid as compared to your savings account.
5. Rates of return:
These deposit accounts insured with a higher rate of interest. It means, the more you deposit, the more interest you will get. But, when this is compared with a risky investment like shares and stocks, the return of money market accounts is not very high.