Posted by ACCU Staff ● 2/10/20 10:00 AM

Benefits of a Money Market Account

Be honest. Along with probably everyone else you know, you've dreamed of winning the lottery, right? Even though you know it's probably not going to happen, it can still be fun to think about what you would do with that lump sum payment!


Whether or not you actually buy a ticket occasionally is up to you. There are, however, some better ways to plan for your future.

Start Saving

Any responsible financial advisor will tell you that a savings plan is vital to your financial health and long-term security. The second part of that good advice is to begin immediately to grow your savings.

It doesn't matter how old you are, how much you make, or even what your goals might be. Putting aside a little cash for "a rainy day" is a good idea, and one that should not only be a short-term effort, but a lifelong habit. Even if you're still in school, chances are good that you can find some leeway in your budget to build up that rainy day fund. 

The problem then is what kind of "piggy bank" to use. 

Types of Accounts

Even though most of your transactions may be online, and "plastic" is more common than cash, you'll want to stash your cash in some sort of separate savings account, preferably one that you can simply forget about unless you're adding money to it. 

Common savings accounts are easy to open and aren't as easy to "raid" as the pickle jar in the refrigerator, but today's interest rates can be discouragingly low. Other insured financial options include timed deposits, often known as Term Share Certificates (TSCs), issued for terms that can vary from 6 months to 5 five years, and money market accounts

TSCs have a place in your overall financial plan, but what about money market accounts?

Overview of Money Market Accounts

A money market account is really a hybrid interest-bearing checking account. It occupies the middle ground between a common savings account that pays a low-interest rate but allows you full access to your funds at a moment's notice and a TSC that will earn a higher interest rate but, in effect, keeps you and your dollars apart for a set period of time. 

Money market accounts offer a variety of options, but commonly they require:

  • A specific opening deposit requirement (i.e. $1,000)
  • Maintenance of a minimum balance in order to earn interest
  • Limited withdrawal ability

Because they offer some of the advantages of both checking and savings accounts, money-market accounts can represent a secure way to earn higher returns on your money and still have the advantage of readily-available funds if necessary. Having a "cushion" of available funds is a real benefit to a depositor who can withstand the temptation to "borrow" those funds for impulse purchases.

Another benefit of money market accounts is that the interest earned is usually tiered, meaning the more you have in your account, the more interest you earn.

For example, rates may be displayed as follows:

$0 - $999                              No Interest

$1,000 - $2,499                  1.00% APY

$2,500 - $9,999                  1.25% APY

$10,000 - $24,999             1.75% APY

$25,000 +                            2.00% APY


We’re Here to Help!

Responsible money management and financial planning are all about saving. It’s the actual act of saving that is most important. Once you’ve established good savings habits, begin to explore different types of accounts to help meet your financial needs.

If you have questions on money market accounts or would like to open an account, stop by or give us a call at 800-343-6328.

Each individual’s financial situation is unique and readers are encouraged to contact the Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.

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