Posted byon August 16, 2010
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Do you know the differences between a savings account and a money market account? Both provide a place for you to stash your money and earn a little interest. But the two types of accounts are not exactly the same thing. Let’s take a look at some of the basics.
First of all, you should be aware that there are actually two different types of money market accounts: money market deposit accounts and money market mutual funds. Money market deposit accounts function more like bank savings accounts while money market mutual funds are a type of (very safe) investment.
In times of higher interest rates, both types of money market accounts may offer more interest than a savings account. In today’s interest rate environment, that difference is negligible unless you are talking about a very large amount of money or a money market sign up bonus. While money market mutual funds are technically the “least” safe of the three accounts we’ve talked about, all three are very safe options that also offer a good deal of liquidity.