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Understanding Money Market Accounts

When it comes to saving, there are so many options out there. There are Certificate Accounts, commonly known as a CD, there’s also traditional savings accounts, but there is one type of account that is not as well known, and that is a money market account.


What is a Money Market Account?

Money Market Accounts are interest-bearing accounts that have some features that are not found in other types of savings accounts. However, they also may have restrictions that make them less flexible that a regular checking account.

There are many advantages to Money Market Accounts:

  • Higher interest: When compared with interest checking accounts and other savings options from larger banks, you can generally expect a higher rate of interest.
  • Accessible funds: Many Money market accounts may come with check-writing privileges; a debit card, and the ability to make transfers online.
  • Keep your money safe: When keeping your money in any account, make sure it is protected at a federally insured bank or credit union.

Potential disadvantages:

  • Limited withdrawals: Unlike a checking account, which doesn’t limit any types of transactions, Money Market accounts typically have restrictions regarding the number of withdrawals or transfers you can make in a month.
  • Account minimums: You’re often required to keep a higher account minimum balance than with a normal savings account or CD.
  • Monthly fees: If you don’t maintain the account minimum, there’s a good chance you’ll be charged a monthly fees.


What is the difference between a Money Market Account and a Certificate Account (CD)?

Many times, financial institutions require a minimum initial deposit in order to open a Money Market account or a CD. However, there are a few differences between the two accounts.

  • Time-Deposit Account: Time deposit, otherwise known as term deposit, accounts are known for having a maturity date. They also come with a guaranteed interest rate. However, when it comes to a time deposit account, there is a penalty for removing the money before the maturity date. CDs are a prime example of a time deposit account, whereas a Money Market Account is not.
  • Different Payouts: Money Market accounts have different payouts depending on how much money you invest into the account. For example, with Legacy’s Money Market accounts, balances between $10,000 and $24,999.99 earn interests at 0.45% APY*. Whereas balances between $25,000 and $49,999.99 earn 1.00% APY*. See all our Money Market rates here.
  • Higher Yields: Money markets accounts normally require you to maintain a higher balance to earn the highest APY*.


Most people use money market accounts to earn more interest with short-term goals and flexibility in mind. Money Market accounts may be good for saving up for a specific purchase such as a summer trip, down payments for a car, or building up your emergency fund. They are not intended for long-term investments such as retirement.


How Do I Choose the Right Money Market Account?

If you feel that a Money Market account is right for you, there are a few things you want to review before choosing which account to open. Here are a few features to consider:

  • Rates: the main attraction of Money Market accounts is the chance to earn interest over time. Find an account that offers a competitive APY*.
  • Fees: Some banks or credit unions charge monthly maintenance fees on their money market accounts. Others waive fees if you meet certain criteria, such as minimum balance requirements. It’s important to know when and if fees are applied to make sure you capitalize on your savings.
  • Deposit Requirements: As with other accounts, Money Market accounts may have their own deposit requirements when opening.
  • Balance Requirements: Along with deposit requirements, Money Market accounts may have a balance requirement and in order to take advantage of those competitive rates. It’s good to know the balance requirements before opening the account.
  • Additional benefits: While a free debit card and check-writing privileges are not always required, they are great perks that could make a difference when comparing your options.


Click here to learn more about Legacy’s money market accounts.


*APY = Annual Percentage Yield

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