If you are looking for a safe place to deposit a large amount of money and earn interest, consider a business money market account. A money market account, or MMA, is a type of savings account that comes with a higher interest rate than other types of savings accounts. However, unlike standard savings accounts a MMA often requires significantly higher minimum deposits and balance. Learn more about opening a business money market account, the benefits of MMAs, and who should apply for one.
How Does a Money Market Account Work?
Money market accounts work similar to conventional bank accounts. By providing some personal identifying information, you can open a business money market account and make an initial deposit. Once deposited, your money will continue to earn interest at a variable rate, which means the rate could go up or down over a period of time. Account holders are able to access their funds at any time using a debit card or check. When considering the amount you will earn with interest, take into account certain fees such as maintenance costs and minimum balance requirements.
A business money market account is basically a mix between a checking account and savings account. Making deposits is easy and the number of deposits you can make is unlimited. While you can access your money easily, there are some limitations. The Federal Reserve Board prohibits customers from making more than six total withdrawals each month from their money market account. However, teller withdrawals do not count towards this limit. With a money market account, you money remains safe in the bank as long as the institution is FDIC insured. Before choosing a bank, make sure that your account will be covered by the FDIC.
Some people confuse a business money market account with a money market mutual fund or money market fund. While there are some similarities, these two options are very different. Money market funds are offered by other types of businesses like investment companies. Unlike most money market accounts, money market funds are not insured by the FDIC, which means you are at risk for losing any money that you invest. While money market funds can be convenient by providing fast access to cash when you need it, the interest rates are typically lower and the accounts are far riskier.
What Are the Benefits of Money Market Accounts?
As a business owner, you always want to make the right decision for your company in all aspects of financing. Opening a business money market account can be a smart choice when trying to gain interest on existing funds. One of the biggest advantages of business money market accounts is their level of safety. As the accounts are insured by the FDIC, you can rest easy knowing your funds are protected. The FDIC insures deposits and any incurred interest to the maximum amount allowed by law.
Another major perk of business money market accounts is the customer’s open access to funds. While you are limited to six withdrawals per statement cycle when using a debit card, check, or form of transfer, you are free to access your money via teller anytime you wish. This means that your money is not tied up unlike other types of savings accounts like CDs. While your money sits in the account, you can also count on interest to accumulate. The interest rate you receive for a money market account will ultimately depend on the bank you choose and the amount of funds you initially deposit.
Along with the benefits mentioned, money market accounts often come with other key advantages that can be beneficial for businesses. Some common extras that you may come across include waived monthly fees with minimum balance, ATM access, special interest rate bonuses, access to banking specialists, daily interest rate accrual, free or discounted checks, credit or debit cards, and increased number of free monthly transactions. To know exactly what extras you have access to, speak with a professional banker from your institution. Comparison shopping is the best way to ensure that you get the best account terms and extras.
Apply for a Business Money Market Account
From business loans to savings accounts, knowing how to best handle your money is crucial for the long-term success of your company. When it comes to earning interest on your money, many business owners turn to money market accounts. A business money market account is fast and easy to open, typically requiring the same paperwork that would be required to open a standard business checking account. Interest made on your money market account is typically compounded daily and paid out monthly. For more information about business money market accounts or to take the first step to opening a business account, contact a professional banker.