The material presented here is for educational purposes only, and is not intended to be used as financial, investment, or legal advice.
How to Open a Money Market Account
Money market accounts can help you save your dough at a faster rate. But what is a money market exactly and how do you open one? Learn how it differs from a traditional savings account and find out how to open a money market account at your bank or credit union.
When it comes to saving money for your big goals, there’s no single right way to do it. But one thing is pretty much guaranteed — you probably want to earn money on your savings if you can.
A money market can potentially help you save faster than a basic savings account because, in most cases, you earn higher interest on your deposits. It’s also more flexible than some other options and carries fewer risks than investing in stocks because the funds in your money market account (including the interest you’ve earned) are insured up to $250,000 by the Federal Deposit Insurance Corporation (banks) or the National Credit Union Administration (credit unions).
Continue reading to find out how to open a money market account and compare the different saving options.
How to Open a Money Market Account
It’s easy to open a new money market account! After you’ve saved up your initial deposit — whether it’s $2,000, $20,000 or $200,000 — you would follow your financial institution’s process for opening an account. You can open an account in person, by phone or online at most modern banks and credit unions. Some financial institutions, including Desert Financial, even offer an easy virtual account opening option through online banking and their mobile banking app.
To open your account online:
- Click the button labeled “open an account” or something similar.
- Enter the requested information (name, SS#, DOB, address, driver’s license, etc.).
- Choose the account from which you want your opening deposit deducted. Note: If you have a cash deposit, you’ll either need to visit a branch or deposit it into another account and complete the transfer from there.
- Finish your application, read and acknowledge any disclosures and click SUBMIT.
That’s it! Many online application systems will notify you instantly if your new account has been approved and provide you with an account number. Others will update you on the status of your application by phone or email. Your bank or credit union will typically email with any follow-up paperwork/notifications or call you if any additional information is needed.
Savings Account vs. Money Market vs. Savings Certificate
There are several ways that you can earn interest on your savings at a credit union or bank, such as with a savings account, money market or savings certificate. With a traditional savings account, you’ll typically earn less interest than with a money market or a savings certificate, but you have the most flexibility. A savings certificate (or a certificate of deposit at a bank) may offer a higher rate of return than a savings account but requires you to keep your money put for a set length of time, typically from 6 months to several years.
Watch this short video to learn more about the differences between traditional savings accounts and money markets.
Many people enjoy the flexibility that a money market account offers. Money market accounts at credit unions and banks usually have higher APY, or annual percentage yield, than savings accounts. But unlike a savings certificate, you don’t have to leave your money in the account for a certain period of time. While a minimum balance is required (often around $2,000), you can add or take out money as you need to. Many money market accounts come with debit cards or checks for this purpose.
How Does a Money Market Grow Your Money?
When you open a money market account at a credit union or bank, that financial institution will pay you a small percentage of your deposit for the privilege of being able to use your money. That percentage is the APY of the account. You’ll earn slightly more on your deposit in each successive year since you’re actually earning interest on your initial deposit plus any interest you earned previously.
Get Started with a Money Market Today
Opening a money market account online is a simple and quick way to start growing your savings. Whether your goal is to set up an emergency fund, stash some vacation cash, work toward saving for a down payment on a house or another personal goal, a money market can help you put aside money for important things while earning interest on that money. Once you’ve opened your new money market account, all that’s left to do is continue adding money to it … and watch your savings grow!