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Many savings accounts have been offering less than a 1% return to savers for years, even though interest rates have been rising. Yes, savings accounts at local banks are convenient. But does that convenience justify earning less than inflation? Many great alternatives exist including high-interest money market accounts that offer the liquidity and security of savings accounts with a higher yield.
A money market account (MMA) could be a good investment choice for investors that are looking for higher rates than conventional bank savings accounts. High-interest money market accounts can offer double or triple the conventional bank savings account rate. Like savings accounts, money market accounts can be liquidated at any time. Liquidity refers to the ability of investors to get their money back quickly. In addition, money market accounts usually offer investors the ability to write some checks on the account each month. While the limited number checks will likely make the money market accounts unworkable as a person's primary checking account, the checking feature does allows investors to easily move funds from one account to another. Finally, the availability of free deposit insurance at most banks and credit unions up to $100,000 by the FDIC and the NCUSIF should reassure any remaining skeptics that high interest money market accounts are a better idea than low interest savings accounts.
Once the decision to open a money market account is made, investors should consider all their options. Those options include opening an account with a familiar local institution as well as discovering a host of new investment options found in online money market mutual funds and online money market accounts. Though investing with local institutions may seem reassuring, the yields available in online accounts can make an investor think twice. Through the power of online databases, the Internet allows investors to quickly search every institution in the country (or the world for that matter) for the highest money market yield.
The best online tool for searching money market accounts and funds can be found at Bankrate.com. The Bankrate.com database is very helpful for tracking the daily movements of hundreds of funds and bank accounts. Searches can be completed by the highest yielding accounts or by state, and this information is available to the public for free.
Disclaimer - The information on this site is believed to be accurate, but no warranty is made regarding rates, terms or features of any financial product. Carefully read the prospectus for any product before investing. The best money market rates, accounts, and funds are determined by individual needs, and tax, financial and legal advisors should be consulted before making an investment.
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