Experienced a pay cut? Here’s what to do next:
- Discuss a plan with family members
- Adjust your budget or create a new one
- Trim non-essential expenses
If you’re reviewing your finances and decide you want to earn more interest while still having easy access to your savings, you may want to consider opening a money market account.
A benefit of a money market account is that it can offer a higher interest rate than your average savings or checking account. At the same time, you’ll typically receive a debit card or checks that you can use to spend the money stashed in your money market account.
This hybrid option is a good choice if you want to grow your money with interest but also need easy access to your cash. If this sounds like you, your next thought might be, “how do I open a money market account?” Easy. “It’s no more difficult than opening a savings or checking account,” Li-Cain says.
You can start the process of opening a money market account by comparing account offerings from different financial institutions.
While opening a money market account is a pretty straightforward process, rates, fees and requirements may vary from financial institution to financial institution. Before you open a money market account, you may want to compare your options to determine which account will best suit your needs.
“There are lots of great online comparison websites where you can search according to location, features and even how much money you intend to open the account with,” Li-Cain says. These websites can help you narrow in on your top choices.
As you learn how to open a money market account and compare offerings, you may want to consider the following:
“Money market accounts are a great option for those who consistently have extra cash on hand in their personal checking accounts.”
If you’re learning how to open a money market account, know that the exact steps will depend on where you open your account. Here’s a rundown of the general process to open a money market account:
Once you open your money market account, you can arrange automatic transfers from other accounts to make use of its higher APY. You may also be able to ask your employer to directly deposit your pay, or a portion of it, into the account.
Since opening a money market account can mean a competitive APY and access to your cash, it can help you save for certain types of large purchases—while still having liquidity if needed. A money market account may also be a good place to keep your emergency fund.
“The funds will only be drawn down in the event of a large, unexpected event and will allow for easy withdrawal when the cash is needed, while earning a higher interest rate over your checking and general savings account,” says Matthew Fizell, a financial planner with Irvine Wealth Planning Strategies. Note that most experts suggest you keep enough cash in your emergency fund to cover at least three to six months of expenses.
“Money market accounts are a great option for those who consistently have extra cash on hand in their personal checking accounts,” Fizell adds. A checking account, however, could be a better fit for day-to-day spending.
If you’re ready to learn more about a Discover Money Market Account, click here.
* Federal law limits certain types of withdrawals and transfers from savings and money market accounts to a combined total of 6 per calendar month per account. There are no limits on ATM withdrawals or official checks mailed to you. To get an account with an unlimited number of transactions, consider opening a Discover Cashback Debit account. If you go over these limitations on more than an occasional basis, your account may be closed. See Section 11 of the Deposit Account Agreement for more details.
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