Money Market Checking Accounts

2007-07-24 08:31:47

( Financial )



What is a Money Market Checking Account?

There are several basic types of deposit accounts. In a savings account, you can deposit or withdraw funds, and you also earn interest as well. On the other hand, a checking allows you the same privilege of depositing and withdrawing, but the bank does not pay you any interest.

The savings account has other variants that pay higher amounts of interest, such as the time deposit and money market accounts. However, you need to keep a minimum balance in the account and you are not allowed to withdraw any funds for a specific period of time.

During the latter half of the last century, banks have come up with a combination account that provides a good compromise between deposit accounts, better known as the money market checking account.

You can make deposits or withdrawals and write checks against your money market checking account. At the same time, you also earn interest on your account balance.

Advantages and Limitations of the Money Market Checking Account

As its name indicates, the money market checking account gives you higher interest yields than a regular savings account. You have the convenience of using checks drawn on this account to make payments. As in a regular checking account, you receive monthly statements.

On the other hand, the bank may also give you other conditions. You are limited to a maximum of about three checks and three withdrawals per month in most cases. The bank will charge you extra fees if you exceed the maximum number of withdrawals per month.

The bank also requires you to maintain a higher minimum balance. You are liable to incur extra service fees if your balance falls below the minimum requirement.

Service fees and withholding taxes may also be higher for money market checking accounts than for savings or checking accounts.

How to Open and Handle Your Money Market Checking Account

Most banks offer this type of account. You can contact the banks directly or check the online sites for the current rates of money market checking accounts.

Before opening a money market checking account, you need to provide the bank with identification documents such as your license or passport. Banks usually requirement a minimum amount that you must deposit to open the account. Most banks allow you to make the initial deposit by cash, check or wire transfer. Deposits by check are subject to a clearing period as well as other restrictions set by the bank.

You need to keep track of all your money market checking account activities, and make sure that you do not exceed the withdrawal or check writing limits, and that your account balance does not fall below the minimum level.


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