Why Money Markets? A Guide
Introduction
A Money Market is a financial tool that offers a great way to earn more on a savings account with slightly more restrictions (although less than a Certificate of Deposit).
A Money Market is a great option for those looking to save for an emergency fund.
Understanding Money Market Accounts
Money Market accounts generally offer higher interest rates compared to traditional savings accounts. They can be a great option for those looking to keep funds liquid but earn a higher return than a Classic Savings account.
How Money Market Accounts Work
Money Market Accounts can be opened online for both existing and new members. Once open, you’ll need to keep a balance of at least $100 to earn interest. Money Market dividends are calculated and credited to your account monthly, so you’ll see those in your account at the end of each month.
One of the main differences between a Money Market and a Classic Savings account is that Money Market accounts allow for only six withdrawal transfers in Online/Mobile Banking per month to another account. This can be a benefit though, if you’re looking to keep yourself from dipping into your emergency savings too often.
Blended Interest Rates
Christian Financial’s Money Market interest rate is a blended rate Money Market. This means that only the funds in each tier earn the listed rate. For example, if the dividend rate for 0.25% APY for balances $100 to $2,499.99 and 0.75% for balances $2,500 to $9,999.99 and your balance is $5,000, the first $2,500 will earn 0.25% APY and the remaining $2,500 will earn 0.75% APY.
Opening Your Account
Money Market accounts can be opened online or in-person at Christian Financial. As a new member, you’ll need a driver’s license, $100 to open your Money Market and your personal information to open a new membership at the same time as your Money Market account.
As an existing member, you can open an account by clicking the “Open an Account” link in Online or Mobile Banking, and your information will pre-fill in the application. You can fund your new Money Market with funds from your existing accounts.
Money Market Accounts vs. Savings Accounts
There are a few key differences between Money Market accounts and Savings accounts at CFCU.
- Interest rate. Money Market accounts earn a higher interest rate, and the higher the balance, the more you can earn. With a savings account, all funds earn the same interest rate no matter the balance.
- Flexibility. Money Market accounts are restricted to only six withdrawal transfers out per month in Online or Mobile Banking, where savings accounts allow unlimited transfers out each month.
All deposits at CFCU are insured up to $250,000 by the National Credit Union Administration (NCUA).
In conclusion, Money Market accounts can be a great option for savers looking to earn a higher interest rate but need to keep close access in case of an emergency. Consider your own personal savings goals to see if a Money Market is a good fit for you.
