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Oh, now’s a good day to save money – right? Bank bonuses for large deposits into new accounts are getting bigger, CD APYs are at their highest in nearly 20 years, and free savings are available to everyone. They offer generous interest rates on their accounts. Everywhere you look, banks seem to be saying, “Pick me! Pick me!” Fight to win your money with his high APY offer before your savings rate starts to drop later this year.
Amid all this exciting chatter, there is one banking product that is often overlooked. It’s a Money Market Account (MMA). These accounts boast high APYs similar to savings accounts, but have versatile withdrawal features similar to checking accounts. Despite some drawbacks, its unique features could make it a good investment for 2024. The reasons for opening MMA are as follows.
Why MMA is a good investment for 2024
MMAs combine high yield and flexibility to help you take advantage of today’s high interest rates while minimizing the risks associated with certificates of deposit (CDs) and some high-yield savings accounts.
An MMA is similar to a checking account in that you often have check-writing authority and can pay for purchases with money from the account. This is different from savings accounts, which typically do not offer checks. Some MMAs have ATMs or debit cards, giving you another way to save money.
Even better, many of the best MMAs have no monthly fees, low starting deposit requirements, and APYs of 5% or more. In fact, if you compare MMAs to high-yield savings accounts or CDs, there isn’t much of a difference in current yields. For example, Vio Bank Cornerstone Money Market Savings has an APY of 5.30%, which is slightly lower than today’s highest-value 3-month CD with an APY of 5.50%.
Why is this so? do not have I want to win MMA in 2024
For all its unique features, today’s MMA has one glaring weakness. They will not lock in today’s high interest rates. In fact, if you have a long-term horizon, you might be better off buying a CD instead.
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Similar to savings accounts, MMA savings interest rates can fluctuate depending on market conditions. These days, this is no longer an issue for MMA account holders, as interest rates remain high through 2023 and will continue to do so into early 2024. But you better believe that when the Federal Reserve starts lowering interest rates, which it likely will do this year, banks will start lowering their savings rates, too.
Sure, there’s still time to earn high interest on your money market account. However, if you can part with more than three months of savings, you may want to open a high-yield CD instead. Unlike MMAs, CDs allow you to lock in your current interest rate for the duration of the contract. Although you may pay a penalty if you withdraw your funds early, several strategies, such as CD laddering and penalty-free CDs, can help prevent losses.
Of course, you don’t have to spend all your money on CDs. Diversification is important, and it may be wise to split your savings among other products, such as MMAs or high-yield savings accounts. Weigh the pros and cons of each and make a savings plan for 2024 before interest rates start falling.
These savings accounts are FDIC insured and can earn you 10 times more than banks
Many people miss out on guaranteed returns because their money sits in large bank savings accounts that earn little interest. We chose best online savings account You can earn 10 times the national average savings account interest rate. click here We reveal the best-in-class accounts that made it to our final list of 2024’s Best Savings Accounts.
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