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Maximize Your Savings with O1ne Mortgage: Avoid These Common Money Market Account Mistakes

Money market accounts offer a unique blend of savings and checking account features, providing the high interest rates of savings accounts with the accessibility of checking accounts. However, to ensure your savings work for you, it’s crucial to avoid common pitfalls. Here are six mistakes to steer clear of when managing a money market account.

1. Failing to Shop Around

Money market accounts vary significantly across banks and credit unions. While federal regulations insure these accounts similarly to checking and savings accounts, other features like annual percentage yield (APY), fees, withdrawal limits, and deposit requirements can differ. Some accounts may even offer a debit card or checkbook with varying fees. Don’t settle for the first option you find; compare multiple financial institutions to secure the best interest rate and features with minimal 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 in 2020, many banks still impose similar restrictions. Exceeding these limits can result in fees that diminish 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.

3. Not Having Enough for an Initial Deposit

Some money market accounts require a substantial initial deposit, sometimes as high as $2,500, to start earning interest. If you don’t have a large sum to begin with, look for accounts with no or low minimum deposit requirements. Alternatively, consider accounts with tiered interest rates that offer more flexible terms for lower deposits.

4. Letting Your Balance Get Too Low

Maintaining a minimum balance is often necessary to avoid fees and earn higher interest rates. Falling below this balance can result in monthly fees, typically around $10 to $15, which can add up and potentially lead to account closure. Ensure you can consistently meet the balance requirements to avoid these penalties.

5. Ignoring the Fine Print

Always read the fine print to understand any fees or rules associated with your money market account. Monthly maintenance fees, check fees, and ATM fees can vary widely. Some accounts offer unlimited ATM or in-person withdrawals, while others impose restrictions. Familiarizing yourself with these details can save you money and prevent unexpected charges.

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 substantial balances. If you’re starting with a lower balance, consider other savings options like high-yield savings accounts or certificates of deposit, which may offer better returns without high deposit requirements.

Find What Works for You

Choosing the right account depends on your available deposit, balance maintenance capability, and access needs. For those with established savings, a money market account can be a great option due to its higher interest rates and accessibility. However, if you’re just starting to save or prefer fewer restrictions, explore high-yield savings accounts.

Remember, you can have multiple types of accounts to meet different savings goals. A money market account can be ideal for long-term savings, while other accounts can serve short-term needs.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. Our team is ready to assist you with confidence and expertise.

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