While CD interest rates are fixed, certain money market accounts have variable rates over time. Below are some alternatives to consider: CDsĬDs hold money for a predetermined time in return for a high-interest rate. If neither a money market account nor a money market fund is a good option, another savings product may meet a company’s financial needs. Other Alternatives to Money Market Accounts Treasury bonds, corporate bonds and other short-term, low-risk investments. Money market funds hold securities portfolios and generate losses or gains based on market factors. Money Market Fund: No FDIC guarantee, but is considered low-risk.īusiness owners may wish to start with a money market account and then add a market fund as their businesses grow and their needs evolve.Money Market Account: FDIC-insured up to $250,000 per depositor, depending on the financial institution.Money Market Fund: Brokers typically charge fees.Money Market Account: Some banks or credit unions charge fees.Money Market Fund: Rates are often higher than money market accounts, but fluctuate in value with the market.Money Market Account: Interest rates vary depending on the financial institution.Unlimited transactions and withdrawals.Money Market Fund: Checks are not available and debit/ATM cards are not often available.The federal government does not limit the number of transactions per month, but banks may charge a fee for more than six transactions.Money Market Account: Checks and debit/ATM cards are often available, depending on the financial institution.Usually low minimum purchase requirements.Money Market Fund: Funds are opened through a brokerage firm.Opening deposit requirements vary by bank, but some have high minimum deposits.Money Market Account: Accounts are opened through an online or brick-and-mortar bank or credit union.Below is a breakdown of the differences between a money market account and a money market fund. While money market accounts allow users to earn interest, money market funds - a type of mutual fund - are investment funds purchased through brokers. For instance, banks often charge at least a $25.00 penalty when the owner withdraws funds from a CD before its maturity date.īusiness Money Market Accounts vs. Lastly, money market accounts allow business owners to make a certain number of withdrawals or debit card purchases without a penalty. Increased number of free monthly transactions.Special interest rate bonuses for meeting pre-specified criteria.Daily interest rate accrual and monthly payouts.Access to small-business banking specialists.Waived monthly fee when maintaining a minimum balance.Other FeaturesĪdditionally, many business money market accounts offer more valuable features that vary depending on the financial institution: Many banks also offer account security options such as two-factor identification to help prevent fraud. Funds up to $250,000 are covered if the bank fails, giving account holders peace of mind that their money is safe. Account-holders may access cash through ATM withdrawal, check or electronic transfer, depending on the financial institution - but many banks have limits on how many transactions can be made in a month without a fee, so it’s important to check the terms of specific accounts.Īccount security is upheld at an FDIC-insured financial institution. Unlike other accounts such as CDs, money market accounts have a high level of liquidity because owners can withdraw funds as they wish. Flexibilityīusinesses with multiple accounts in the same bank, such as personal savings and checking, can quickly transfer money in and out of a money market account, unlike accounts with more restrictions, like certificates of deposit. Linking a debit card to the account allows owners to pay for occasional purchases and bills. These accounts also offer easier access to cash than a savings account. Money market accounts typically have better interest rates than traditional savings accounts, allowing businesses to grow their money more quickly. The IRS recommends that small business owners keep a separate business account, such as a money market account, for tax purposes and the protection of the owner’s personal assets from legal liability. Other advantages of a money market account are detailed below. Advantages of Opening a Business Money Market Account
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