There are many different types of banking accounts that you can have, and these accounts will provide different types of benefits and options. However, banking consumers are often not very informed about their options when it comes to banking accounts. Money market accounts can be especially poorly understood due to the numerous myths that consumers may hear about this type of banking account.
Myth: A Money Market Account Is Another Name For A Checking Account
One assumption that some banking consumers will have is that a money market account is simply another term for a standard checking account. However, there are differences between these accounts. While a money market account can be used in many of the same ways that a standard checking account can be used, the difference is that a money market account will pay interest to the account holder.
Myth: Money Market Accounts Will Have A Time Restriction For Withdrawing
Certificates of deposit are another type of financial tool that individuals can use to achieve their financial goals. However, CDs will have strict limitations on being able to access the money that is held in the CD. Due to the fact that a money market account will pay interest, individuals may assume that they will have to wait a minimum period of time before they are able to withdraw money that has been placed in the money market account. Luckily, this is not the case as individuals will be able to immediately access the money that has been deposited into the money market account. However, the amount of interest that is paid on these accounts will typically be calculated based on the average monthly account balance for the account holder. This can create a powerful incentive for individuals to attempt to keep their money market account balance as high as possible.
Myth: You Must Have Good Credit To Open A Money Market Account
Individuals with credit problems may not consider the option of opening a money market account due to the belief that they will have to pass a credit check in order to be able to open one of these accounts. Yet, the credit requirements to open a money market account are typically not much different than what is needed to open a checking account. Generally, a person's credit score will not be a major concern, but a history of overdrafting or having bank accounts closed due to overdrafts can make it harder to open one of these accounts.
For more information, get in touch with companies like MidwestOne Bank.