It is time for a serious talk. All the financial advice for students sound boring. But did you realize that your money just sleeps on its job? Traditional checking account is like a lazy roommate who eats all your snacks but pays no rent. Time to make your money work.
First of all, let me dispel the myth about Money Market Accounts. It is a creature with a weird genome – the interest rates of a savings account and the flexibility of a checking one. The interest rates of MMAs are significantly higher than in a traditional savings jar at Chase or Bank of America. Simply put, banks pay you for keeping money there.
What factors have to be considered while picking the right MMA for yourself? First, look for a bank with zero monthly maintenance fees. This means that if you pay them $5 a month, run away from this bank immediately. Also, pay attention to interest rates. APY (Annual Percentage Yield) shows you how much extra money you will earn in a year.
Secondly, the minimum balance requirement has to be checked. Banks may ask you to keep at least $1000 in your account all the time. If you do not have enough money and go below the minimum requirement level, you will have to face some penalties. Therefore, it is better to pick banks like Ally Bank or Marcus by Goldman Sachs where minimum balance requirements are lower.
Accessibility is the third factor you have to consider. Do you want to know how easily you can withdraw your money from the account and buy new shoes or concert tickets? Almost all MMAs give you an opportunity to use debit cards or write checks, which is better than in a traditional savings account. But remember about transaction limits, which were imposed by the government and equal six per month. The regulations are changing, however, and always check the terms and conditions.
So, in conclusion, it is quite a simple process of picking a Money Market Account, which takes you around 15 minutes using your smartphone. It is one of those boring but important adult tasks, which can improve your life in the future. Make a fortress for your future self and stop sleeping on your money.