Top Business Savings Accounts

Top Business Savings Accounts – You may be wondering where to keep the money you’ve started saving. Some of the most popular options are money market funds, money market accounts (MMAs) and regular savings accounts. All three are highly liquid places to store cash, meaning you can easily access funds when you need them.

However, there are some key differences you should be aware of. Most traditional savings accounts offer fairly nominal interest rates, so you may find that money market funds or MMAs are a better alternative as they tend to offer higher returns. And unlike savings accounts, many mutual funds and money market accounts let you write checks and easily transfer money to your savings account.

Top Business Savings Accounts

Money market funds are mutual funds offered by brokers, investment companies and financial services firms. They raise money from several investors and invest in high-quality, short-term securities. Although they are technically an investment, they act more like demand accounts because the money is readily available.

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These mutual funds may have minimum initial investment requirements, as well as balance requirements and transaction fees. There are also associated fees that bank accounts do not charge, including the expense ratio, which is the interest charge charged to the fund for management costs.

Dividends in mutual funds can be taxable or non-taxable, depending on how the funds invest. They are not insured by the Federal Deposit Insurance Corporation (FDIC), although they are closely regulated by the Securities and Exchange Commission (SEC).

Their activity is closely related to the interest rates set by the Federal Reserve System. Very low rates mean these funds can’t beat a savings account after you factor in fees. So, do your research before moving your money into a money market fund. They also may not yield as high a return as the stock market, but they carry less risk and yield better returns than an interest-bearing savings account. Keep in mind that like any other investment, there is no guarantee of return.

Although money market accounts (MMAs) look similar to money market mutual funds (and people often confuse the two), they are actually closer to savings accounts. In fact, one way to think of them is as a savings account with some of the benefits of having a checking account.

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MMAs are interest-bearing accounts held at a bank or credit union. If they are in a bank, they are insured by the FDIC, and if they are in a credit union, they are insured by the National Credit Union Administration (NCUA).

Money market accounts often have a higher minimum deposit or balance requirement than regular savings accounts. But they offer higher returns that are more on par with money market funds. The interest rates offered by the account may vary depending on the amount of money you keep in the account.

Some banks allow MMA account holders to write checks and use their debit card for purchases, transfers and withdrawals at automated teller machines (ATMs). Although the Federal Reserve removed the withdrawal limits under Regulation D in 2020 (account holders were allowed up to six withdrawals per month), your bank may still limit your ability to access the funds in your account. That’s why it’s important to check with your financial institution about the rules for your money market account.

Money market funds and money market accounts sound similar because they invest and earn interest on the same kinds of things: the short-term debt instruments that make up the money market. For example, a money market mutual fund, or MMA, invests in certificates of deposit, government securities, and commercial paper, while savings accounts do not.

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Savings accounts are offered to consumers by banks, credit unions and other financial institutions. They are generally considered a safe, convenient place to keep money while you save for a big purchase or for the future. Because of how liquid they are, savings accounts are great for short-term needs. That’s why many people use traditional savings accounts to store their emergency funds.

These types of accounts are interest-bearing, meaning they earn money and grow over time. Although some online banks offer high-yield savings accounts with more competitive interest rates, they tend to pay lower interest rates than any other savings vehicle, including money market deposit accounts or mutual funds. Prices may vary depending on how much you keep in your account.

Money market accounts and savings accounts are considered very low risk vehicles. But, of course, there is the usual safety trade-off: less risk equals lower return. Simply put, you won’t make as much money in these two vehicles as you would with other investments that come with more risk. Reason for this:

MMAs are still prone to changes in interest rates. If the Fed decides it wants to stimulate the economy and lowers the federal funds rate (where commercial banks borrow overnight and lend each other excess reserves), it can create a ripple effect throughout the financial markets. This can result in lower interest rates on these bank accounts.

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The way the interest on your money market or savings account is compounded—for example, annually, monthly, or daily—can have a significant impact on its return, especially if you maintain a high balance in your account.

Let’s say you want to stick with one of your bank accounts. Researching the details of the different options in each type will help you avoid high fees and minimum order amounts.

If you have at least four figures to save, you can choose a money market account. It makes sense if you can easily maintain such a minimal account balance for a long period of time. You will be rewarded with slightly better productivity for this. The higher your balance, the higher the interest.

If you want to write a check or withdraw from your account using a debit card, a money market account also offers these benefits. But because you’re earning more interest, it’s a good place to keep funds for a fairly long period of time — at least a year — for mid-range expenses or a goal.

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If you have a more modest amount to deposit (less than $1,000) and don’t want to worry about maintaining account minimums or fees, a savings account is a better option. If check writing/constant liquidity isn’t an issue – you mostly keep your money there, except for the occasional transfer – a savings account will also work well for you.

Because you can easily withdraw money from it and you don’t earn much, a savings account is good for saving money for short-term purposes, such as until your vacation or big purchase.

A money market fund is an alternative to money markets and savings accounts. Money funds are mutual funds that invest in short-term debt such as Treasury bills, CDs, commercial paper, cash and cash equivalents. These are all highly liquid assets and the funds of the mutual fund are highly available, meaning you can often access the funds on the same day. Some MMFs even come with check or debit cards.

Another option is a high-interest checking account. They have all the features that come with traditional checking accounts — plus, as the name suggests, they offer interest rates that rival and sometimes beat money market accounts (though they often have limits on the amount of balances they’ll pay open). They may also require a certain number of transactions per month.

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A money market account and certificate of deposit, interest-bearing financial accounts offered by banks and credit unions are also insured. However, a money market account is an open (ie continuous) demand deposit account. This means you have access to your funds almost whenever you want.

Your bank may limit the number of withdrawals or transfers you can make during a certain period, but this is a very liquid account and you can close it without penalty if you wish. Funds in the account earn interest at a variable rate.

Unlike a CD, you deposit a certain amount in the bank for a limited period of time – from one month to 10 years. During this time, the CD usually earns interest at a fixed rate. This is more than what MMA offers, but the bottom line is that your money (both principal and interest earned) is locked in for the entire term. If you access the funds, you will likely face a charge or penalty for early withdrawal. So no checks, transfers or liquidity – that’s the trade-off for a higher return on your deposit.

Because the rules and returns for money market accounts vary widely, it pays to shop around. One good place to start is with your current financial institution. While it doesn’t matter if your MMA is at the same bank as your checking or savings account, there may be special offers, benefits or perks for holding or combining multiple accounts.

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In fact, you don’t have to be limited to your local area, or even a brick and mortar factory,

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