You probably already know that saving money is a great habit to get into. And as with any good habit, the more often you do it, the easier it gets. Maybe you’ve increased the amount you set aside each month with each annual pay raise. Or maybe you’ve automated your savings so they grow out of sight, out of mind. There are several ways to build a solid savings strategy – but once you’ve built one, you won’t want to stop there. It may be time to step up your game if saving up has become second nature.
Whether you’re a savings veteran or just getting started, you should have a plan to take your savings game to the next level. A Money Market Savings Account could be the right tool to grow your savings once you’ve outgrown your savings account.
What is a Money Market Savings Account?
Basic savings accounts in the US offer APYs of 0.06% on average. MMSAs are similar to these basic savings accounts but typically offer a higher rate – meaning you can earn more interest on your deposit. Accounts with larger balances will often have the best rates.
MMSAs also allow you to write a limited number of checks each month. This is a great benefit if you expect to need those funds a few times throughout the month. This feature is known as liquidity, or having easy access to your money.
Like with most accounts, MMSAs are federally insured up to a certain amount*, which makes them less risky than investing in securities.
When should you open a MMSA?
Let’s look at a few real life scenarios where using a MMSA makes sense.
- You’re a master of savings, and you’ve accumulated a healthy sum beyond your emergency fund. You also have very little debt, and can park your money in an account to start earning interest.
- You just sold a big-ticket item and you want to deposit the money somewhere it can grow. You can also have access to it when you need it.
- You received a monetary gift or inheritance and want to keep these funds separate from your everyday accounts.
- You’re saving for a specific project or event that may require you write a check, such as a home renovation.
If you find you’re further away from these scenarios, there’s still a way for you to work a MMSA into your savings strategy. Some financial institutions will allow you to set up recurring deposits from other accounts into your MMSA. This way, you can start building your funds automatically. Before you know it, you’ll start earning more interest as the account total increases. Now that’s making your money work for you!
Options that work for you are the key to a solid savings strategy, whether you’re just starting out saving, or stepping up your savings game. When you’re ready, consider opening a MMSA to reap all the benefits the account has to offer.
*NCUA/FDIC insurance is up to $250,000 per account ownership category.