Sarah: Hi! I am Sarah with Wells Fargo and Company. Today, we are going to discuss how you can earn higher interest rates with the money market account or CD or Time account.
Money market accounts are similar to traditional savings accounts and that you earn interest. But the interest rate is typically higher. In order to get the higher interest rate you are usually required to have a higher minimum balance requirement for money market accounts.
You can buy checks from your money market account, but there are usually limits on the number of withdrawals you can make each month. Unlike money market mutual funds, money market accounts are FDIC insured up to the applicable limits.
The three key elements of a money market account are that it generally earns a higher interest rate than a regular savings account, it may require a higher minimum balance and it may place a limit on the number of checks that can be written.
If you are interested in getting an even higher interest rate you can consider a CD or Time account. These accounts require that you keep your money in an account for a fixed period of time, also known as a term. The term can be anywhere from a few months to five or more years.
Generally, you earn higher interest with CD than with traditional savings or money market accounts. In most cases the interest rate is typically higher, the longer the term. But you need to be aware of the possible penalties if you withdraw money before the end of your term.
Deposits in CDs are also FDIC insured up to the applicable limits. Both money market accounts and CDs are good choices if you are willing and able to maintain a minimum balance and in the case of CDs, if you can wait until the term is met before withdrawing the funds.
So this is some basic information on how you can earn higher interest rates with the money market account, or CD or Time account.