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5/30/2018

Three Money Market Account Myths

Don't miss out on a very smart way to grow your savings

Looking for the best account to grow your savings while maintaining access to your funds? Many people believe that a money market account isn't right for them. Don't be fooled by these money market myths:

  • Myth 1: A money market account is the same as a money market fund. Although the names are similar, the actual products are very different. A money market account is a type of bank savings account, with a declared interest rate and FDIC protection. A money market fund is a type of investment that is not FDIC insured and has a fluctuating rate of return or "interest rate" that varies with financial markets.
  • Myth 2: The minimum deposit is too high. Each bank determines the minimum deposit amount for its money market accounts. Typical minimum deposits can range from $100 to as much as $2,500 (the minimum to open a CIT Bank Money Market account is $100).
  • Myth 3: I don't need more than one savings account. Setting up in individual savings accounts for short- and long-term savings goals makes smart sense because the reasons for savings vary. Are you saving for a house, creating an emergency fund or putting money aside for your kid's college tuition? Keeping accounts separate makes it easier to track savings growth. When you tap your funds, you won't derail other savings goals.

The facts about money market accounts

So exactly what is a money market account? A money market account might best be described as a hybrid between a checking and savings account. It typically earns a higher rate of interest than a regular savings account and allows limited monthly access to funds via electronic funds transfer, check writing, and/or ATM or debit card withdrawals.

Although a money market account can help you reach your savings goals, be aware of some limitations. If you make more than the specified allowable transactions during the statement period, there could be a fee. And, in some cases, if you do not maintain the required minimum balance there may also be a fee, or your interest rate could be decreased.

Overall, there are advantages to having a money market account. It's an FDIC-insured, flexible and accessible account you can use for building up a financial safety net for emergencies or saving for a short- or long-term goals. And, the interest rate for a money market account at an online-only bank such as CIT Bank is typically many times higher than a traditional bank.

For information and interest rates on a CIT Bank Money Market Account, click here.

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