Investing, trading, getting involved in the stock market or real estate…all of these can be very lucrative moves, but also come with a certain risk. A simple, virtually risk free way to make a steady income is by using a money market account. An online money market account will compete for your business, as well, making the opportunity even more attractive.
Of course, first you’d like to know what a money market account is. Basically, it’s a savings account with a high interest rate. The bank, or money market fund, pays you a monthly interest rate simply for using their service. Usually, there is minimal initial deposit and/or a minimal account balance that you have to keep in order to keep the interest privileges. There may also be a maximum number of transactions you can make on that account per month. Over a period of time, however, you might be able to a accrue a decent amount of interest. That means you’re making money just by letting money sit!
In general, the higher the minimum deposit or account balance, the higher interest rate you’ll find. The best online money market account rates are therefore subjective. If you have a lot of money to deposit, say $10,000, you can find a rate and annual percentage yield of 1.5% or 1.6% percent. A minimum deposit account of $1 or no minimum deposit might only yield 1.2% or 1.3%.
Money markets are offered either by banks or credit unions. The safety of a bank is that their money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC). Even if the bank goes out of business, your money– or at least the vast majority of it– is insured and available. The FDIC insures funds up to $250,000. It is an independent agency of the federal government, in contrast to the National Credit Union Administration (NCUA), a federal agency that insures credit unions. Basically, your money is safer in a bank than a credit union.
The advantage of using such an account online is primarily about convenience. Easy depositing, withdrawals, and general access is facilitated by online technology. Fees and paper statements are usually significantly less with online money market accounts, as well.
Make sure that any money market you use is FDIC insured. Read reviews to feel confident that their site is easy to maneuver, customer service is up to par, and that there is a general positive rating. Then, let the money accrue!
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