Advantage And Disadvantages Of Money Market Accounts

Posted by Credit expert

July 31, 2011

Money market accounts also known as MMA are offered by the banking institutions and other credit unions and banking institutions for those individuals who wanted to keep their hard earned money and generate higher interest rates. This type of account could be saved for the period of one year or over. However, the MMA has its own advantage and downsides too.

Here are the lists of the MMA’s advantage and disadvantages:

Security - usually, all of these accounts are being insured by the FDIC to the extent of amount of $250,000. If ever the bank or any financial institution goes bankrupt, the depositors will not face the danger of loosing all of their hard earned money. Because of this, the deposits in this account are believed to be safe compared to the stocks and mutual funds.

Minimum transaction - this is actually the major disadvantage of this account. Minimum balance required for this particular account is $5,000 compared to the traditional savings account which requires only $50.

Maintenance charges - when the depositor maintains the minimum balance, there is no worries to be charged with extra fees. Nevertheless, when the balance will fall under the minimum level, the depositor will surely be charged with predetermined fees.

Liquidity - This kind of account is very easy to be accessed by depositors. This account is highly liquid compared to Certificate of Deposits or CDs that is usually having maturity date. The disadvantage of this particular money market is the restriction of the number of checks that you can issue along with the maximum amount that the checks could be presented.

Rates of return - the more down payment you put in this account, the greater interest you can also earn. However the returns when being compared to the risky investments like stocks and shares, the MMA return is not that potential and that is considered to be the disadvantage. Great information can be found through visiting this site http://www.Money-Market-Account.Net.

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