AAA South Jersey July/August 2012 : Page 34
Money Market Deposit Account Basics: A Good Way to Save Today Safe, secure and conservative, money market accounts (MMAs) are proving to be an investment bright spot that can help you save more confidently in today’s volatile economy, say financial experts. “With a sinking and volatile stock market, you’re seeing many consumers flock to money market deposit accounts,” says David Barr, a spokesman for the Federal Deposit Insurance Corp. in Washington, DC. This is largely due to FDIC insurance currently covering up to $250,000 of assets per person, per bank, per deposit category. That’s a protection not generally available to holders of stocks, bonds, or money market mutual funds. “If you are now afraid of the stock market, and you don’t have the money to lose, a money market deposit account is what you should consider,” says Deborah Pavelka, a professor of accounting at Roosevelt University in Chicago. 24-mo APY 1 nth Ce rtificate as of 6 o /12/12 f Deposit 1.20 % “The deposit rates today [on MMAs] are very competitive,” Barr says. Some of the best rates are available from online banks that pass on to customers the savings from not maintaining brick-and-mortar facilities. Many online money market accounts also offer perks such as check-writing privileges, debit cards and fewer fees, Pavelka says. “A money market deposit account can serve as a holding tank for your money while you wait for the stock market to stabilize,” Pavelka says. “But depending on the perks, Learn How Money Market Accounts a money market deposit account can also serve as your primary checking account.” Fit Into Your Financial World In general, MMAs resemble a standard bank Money Market Accounts: Rely on account, although many have a monthly or FDIC Insurance Protection quarterly restriction as to how many times MMAs offer the advantage of FDIC you can make a withdrawal or deposit, insurance, Barr says. With the passing experts explain. “But what they don’t have is of federal legislation in the fall of 2008, the maturity date of a [certificate of deposit],” individual MMAs are now protected up to Barr says. $250,000 while joint accounts are covered to An MMA, when linked to a checking twice that amount. account at your current bank, can help you “These accounts can offer significant earn more interest on funds that would insurance levels and my suggestion is that normally sit in low-or no-interest checking consumers visit the FDIC Web site (www. accounts. When you need cash in your fdic.gov) to see how much protection can checking account, you can transfer from be available for joint accounts,” Pavelka one account to the other. If you’re banking says. The site provides consumers with online, transferring funds is as easy as the most current FDIC insurance limits logging in. and demonstrates how joint accounts and Because they fill a niche between a standard accounts with named beneficiaries enjoy savings deposit account and a certificate of higher coverage levels. deposit (CD), most MMAs offer interest While some consumers may be driven to rates that are slightly higher than a savings the best rates an MMA offers, others may be account while allowing easier access to your interested in convenience, such as a variety funds than a CD. “So you have a product of withdrawal methods and live customer that offers a higher interest rate than a service. Barr also advises, look for any fees savings account but more flexibility than a that may be attached to a money market CD,” Barr says. deposit account. As a result, an MMA can be extremely For information about AAA’s Deposit attractive to consumers who may only need Program, visit AAA.com/Deposits or call to dip into their reserves a couple times a 1-888-728-3151. month, experts add. Overall, it is a simple and secure way to invest your funds. AAA.com • SJ First • 34 • July/August Choosing the Best Money Market Accounts For You Recalculating... a better return route Point your money in the right direction with AAA CDs: • Preferred member rates on 12, 24, and 60-month CDs • Security and peace of mind with FDIC insurance up to $250,000 2 • 5-star Safe and Sound rating from Bankrate.com 3 • Fixed rate and guaranteed returns with flexible terms Open a CD account today— online or by phone! AAA.com/Deposits 1-800-347-7054 Banking Specialists available 24/7 Mention Offer Code: XXXXXX A120397 CDs | IRA CD’s | Money Market Accounts | Online Savings Accounts Annual Percentage Yield (APY). Applies to personal accounts only. Advertised CD rate is valid as of XX/XX/XXXX 6 / 12 / 2 0 12 and subject to change daily without notice. Rate applies to a 24-month term. A penalty might be charged for early CD withdrawal. Fees could reduce earnings on the account. Deposit accounts offered through Discover Bank Discover Bank, Member FDIC. 2 Per depositor, per deposit category. 3 Bankrate.com (4Q-2011), Safe & Sound ® Ratings. ©2012 Discover Bank, Member FDIC 1
Money Market Deposit Account Basics: A Good Way To Save Today
Safe, secure and conservative, money market accounts (MMAs) are proving to be an investment bright spot that can help you save more confidently in today’s volatile economy, say financial experts.<br /> <br /> “With a sinking and volatile stock market, you’re seeing many consumers flock to money market deposit accounts,” says David Barr, a spokesman for the Federal Deposit Insurance Corp. in Washington, DC. This is largely due to FDIC insurance currently covering up to $250,000 of assets per person, per bank, per deposit category. That’s a protection not generally available to holders of stocks, bonds, or money market mutual funds.<br /> <br /> “If you are now afraid of the stock market, and you don’t have the money to lose, a money market deposit account is what you should consider,” says Deborah Pavelka, a professor of accounting at Roosevelt University in Chicago.<br /> <br /> Learn How Money Market Accounts Fit Into Your Financial World <br /> <br /> In general, MMAs resemble a standard bank account, although many have a monthly or quarterly restriction as to how many times you can make a withdrawal or deposit, experts explain. “But what they don’t have is the maturity date of a [certificate of deposit],” Barr says.<br /> <br /> An MMA, when linked to a checking account at your current bank, can help you earn more interest on funds that would normally sit in low- or no-interest checking accounts. When you need cash in your checking account, you can transfer from one account to the other. If you’re banking online, transferring funds is as easy as logging in.<br /> <br /> Because they fill a niche between a standard savings deposit account and a certificate of deposit (CD), most MMAs offer interest rates that are slightly higher than a savings account while allowing easier access to your funds than a CD. “So you have a product that offers a higher interest rate than a savings account but more flexibility than a CD,” Barr says.<br /> <br /> As a result, an MMA can be extremely attractive to consumers who may only need to dip into their reserves a couple times a month, experts add. Overall, it is a simple and secure way to invest your funds.<br /> <br /> Choosing the Best Money Market Accounts For You<br /> <br /> “The deposit rates today [on MMAs] are very competitive,” Barr says. Some of the best rates are available from online banks that pass on to customers the savings from not maintaining brick-and-mortar facilities. Many online money market accounts also offer perks such as check-writing privileges, debit cards and fewer fees, Pavelka says.<br /> <br /> “A money market deposit account can serve as a holding tank for your money while you wait for the stock market to stabilize,” Pavelka says. “But depending on the perks, a money market deposit account can also serve as your primary checking account.”<br /> <br /> Money Market Accounts: Rely on FDIC Insurance Protection <br /> <br /> MMAs offer the advantage of FDIC insurance, Barr says. With the passing of federal legislation in the fall of 2008, individual MMAs are now protected up to $250,000 while joint accounts are covered to twice that amount.<br /> <br /> “These accounts can offer significant insurance levels and my suggestion is that consumers visit the FDIC Web site (www. Fdic.gov) to see how much protection can be available for joint accounts,” Pavelka says. The site provides consumers with the most current FDIC insurance limits and demonstrates how joint accounts and accounts with named beneficiaries enjoy higher coverage levels.<br /> <br /> While some consumers may be driven to the best rates an MMA offers, others may be interested in convenience, such as a variety of withdrawal methods and live customer service. Barr also advises, look for any fees that may be attached to a money market deposit account.<br /> <br /> For information about AAA’s Deposit Program, visit AAA.com/Deposits or call 1-888-728-3151.
