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What is a Money Market Checking Account

By Edited Aug 6, 2015 1 2

If you are trying to decide on which kind of checking account that is right for you, then you may be asking yourself what is a Money Market checking account? A Money Market Check Account is a demand account that requires a rather substantial amount to open, but yields a higher annual interest rate than a typical interest bearing checking account. Check writing abilities are usually limited to only three checks a month and there is a amount that must be maintained on a monthly basis. There is also a limit on the amount of withdrawals that one can make with this type of an account. Depending on the amount of the balance maintained monthly in this type of account determines the tiered interest rate system that the account is in. Each tier has an expected rate of interest attached to it’s terms. The higher the tier that your checking account is in the more interest you should expect.

If you are planning on opening one of these you will be required to put down at least $2,500 just to get started and you must maintain a $500 a month minimum balance. Different banks will have different rate so it is important to ask your financial institution about their rates and to shop around for the best rate that will suite your circumstances. A Money Market Checking account offers higher accrued interest depending on a set maintained balance and a tier system. The higher the balance, the higher the tier, and consequently the higher the interest received. This type of an account takes away the stigma that is associated with lower interest bearing checking account, and it also allows the holder to have a savings type of account with the ability to write checks. Banks also offer a Money Market savings account, however, the interest accrued is less than the Money Market checking account and not all banks will offer them as an option.

Tiers usually run from 0 to $2,500 for one interest rate. Then they run from $2,500 to $5,000 for another and so on. If you have a large amount of capitol on hand, then this is a viable option for you. Some money market accounts offer what is known as a sweep option. This option allows for you to transfer funds into another account for a specific amount of time with the perk of receiving a higher rate. Then it is placed back into the originally account. This is a great way to make even more on your Money Market Checking Account. And on another positive note, these accounts are federally insured just the same as a typical checking and savings account.

Any time that you are considering different options for the best return on your money, do your homework. Shop for an account just as you would for any other product. Banks offer different incentives per dollar and you will want to find the best bang for the buck. Furthermore, you should make sure you read through all of the fine lines and know all of the fees incurred before signing on the dotted line. It is great that you have this much money to invest, but for the banker this is a business and one that they are well knowledgeable and versed. If you have accrued a lot of income, then you will want to keep it that way.

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Comments

Mar 17, 2011 7:43pm
southerngirl09
It's a good idea to shop for personal banking. With interest rate being so low we need to expand our search and look for other doable checking accounts. Thanks for sharing information on money market checking accounts.
Mar 19, 2011 3:18pm
pwarlick
Money market checking accounts are a great investment if you have the funds.
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