In the United States, banks offer money market accounts or MMAs, on which you earn interest based on the current money market interest rates. They are deposit accounts, which offer investments in state and corporate bonds. Traditionally, MMAs have high interest, which is why having a higher balance is a prerequisite. With a high minimum balance in your account, you can also avoid monthly fees. Checks can be written on these accounts, despite the fact that they do not have the legal status of checking accounts.
Before you open such an account, you must be familiar with the rules that govern MMAs in the United States. Money market accounts are subject to the regulations enforced on savings accounts. This includes a limit of six withdrawals to third parties a month. If you exceed this limit, you will be charged high penalties. If you systematically exceed the limit, your account may be closed as well. It also depends on the bank you decide to open a money market account with. Some banks have a limit of six transactions period, not just six withdrawal transactions. Sometimes this also includes ATM transactions. You should know that banks have the right to impose any additional regulations if they decide to.
As with almost all financial operations, finding information about a money market account can be done online. You will need Internet access and some knowledge of financial software. You should start with shopping around for the best terms and interest. Certain websites provide comparisons between banks and credit unions with the best deals. Then you have to decide what exactly you are looking for. Find out what the fees are and what the minimum balance is. In most cases, it ranges from $500 to $2,500 at any given point in time. The minimum opening balance is normally set at $1,000. There are charges if you fall below the limit; so, take the time to find out what it is. Now it is time to make some calls. Find the contact information on a number of banks that seem to meet your requirements and ask them to send you more details and an application form by mail. You can also open an account by mail or over the phone, especially if you already have a different account with the respective bank.
To open a money market account, you have to provide personal details such as your social security number, current address, email, military or state ID or driver’s license. Naturally, you have to be a US resident and at least 18 years old. If you will be funding the account from another financial institution, you will have to give your account and routing number. If you are opening an account online, you have to use Mozilla Firefox 1.5 or higher, Internet Explorer 6.0 or higher, or Safari. Submitting the information online takes just about 10 minutes.
The next step is to assure yourself that the money market account is FDIC insured. Finally, decide on how you are going to spend the interest. One good idea is to put it back in the account. You can also use it to pay off credit card debt or for emergencies. A good idea would be to check out what accounts your current bank offers. There might be special benefits for existing clients. Finally, if you plan to deposit a large sum of money into the account, you may want to discuss this with your accountant first. You will maximize income and avoid negative tax consequences this way.
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