Money market accounts are a unique blend of savings and checking accounts, offering the high interest rates of savings accounts with the accessibility of checking accounts. However, to truly benefit from a money market account, it’s crucial to avoid common pitfalls that can negate your earnings. Here are six mistakes to avoid to ensure your savings work for you.

1. Failing to Shop Around

Money market accounts vary widely in terms and benefits across different banks and credit unions. While federal regulations insure these accounts similarly to checking and savings accounts, financial institutions can set their own features such as annual percentage yield (APY), fees, withdrawal limits, and deposit requirements. Some accounts may even offer a debit card or checkbook for easier access to funds, with varying fees for these perks.

Don’t settle for the first money market account you come across. Comparison shop across multiple financial institutions to ensure you’re getting the best interest rate with the most favorable features and the fewest fees and restrictions.

2. Withdrawing Too Often

Money market accounts are not designed for frequent withdrawals. Although the Federal Reserve removed the six-withdrawal limit per month in 2020, some banks and credit unions still impose similar limits. Exceeding these limits can result in fees that eat into your savings.

If you need frequent access to your funds, consider keeping some money in a checking account and reserving your money market account for long-term savings like an emergency fund.

3. Not Having Enough for an Initial Deposit

Money market accounts often require a larger initial deposit compared to other savings accounts. While some accounts have no minimum deposit requirement, others may require at least $2,500 to open or to earn interest. If you don’t read the terms carefully, you might find yourself needing more money upfront than you have available.

Look for accounts with no minimum deposit requirement if you don’t have much money to start with. Some financial institutions offer tiered interest rates with more flexible terms and lower deposit requirements in exchange for a lower APY.

4. Letting Your Balance Get Too Low

In addition to the initial deposit, many money market accounts require you to maintain a certain balance at all times. Failing to meet this requirement can result in monthly fees, which can add up and even lead to your account being closed.

Ensure you can maintain the required balance to avoid fees and maximize your interest earnings. If you need to make a large purchase, plan to replenish your account to avoid falling below the minimum balance.

5. Ignoring the Fine Print

Always read the fine print when opening or managing a money market account. Monthly maintenance fees, check fees, and ATM fees can vary widely between accounts. Some accounts may offer unlimited ATM or in-person withdrawals, while others may charge for these services.

Understanding the terms and conditions can save you money and prevent unexpected fees. Take the time to read the details to ensure you’re getting the best deal.

6. Missing Out on More Earnings Elsewhere

While money market accounts can offer competitive interest rates, the best APYs are often reserved for those with hefty balances. If you’re starting with a low balance, you might earn more interest with a high-yield savings account or a certificate of deposit (CD) with lower deposit requirements.

Consider your financial situation and explore other savings options to maximize your earnings. High-yield savings accounts and CDs can offer solid APYs without the need for a large initial deposit.

Find What Works for You

There’s no one-size-fits-all solution for saving money. The best account for you depends on your available deposit, balance maintenance, and how you want to access your funds. For those with established savings, a money market account can be a great option, especially with the added benefit of ATM or check access.

If you’re just starting to build your savings or prefer fewer restrictions, consider high-yield savings accounts. These accounts typically offer better APYs without the need for a minimum balance.

Remember, you can have multiple types of accounts to suit different savings goals. A money market account can be ideal for long-term savings, while other accounts can be used for shorter-term goals.

Contact O1ne Mortgage for Expert Mortgage Services

At O1ne Mortgage, we are committed to helping you achieve your financial goals. Whether you’re looking to open a money market account or need expert mortgage services, our team is here to assist you. Call us today at 213-732-3074 to learn more about how we can help you maximize your savings and secure the best mortgage options.