The Difference Between Money Market Accounts And CD's
During tough times, it is best to save and put your money in the bank. By saving your money, you are able to prevent yourself from spending too much. Aside from this, another advantage of putting your money in the bank is that you are able to earn a passive income. This means that you earn income without doing anything.
A passive income is possible through the interest you earn from the money you have deposited. If you are serious about saving money and earning a continuing income through bank deposits, you should consider some important factors. The first thing you should do is to study the money market and certificate of deposit rates to understand what they pay.
A money market account is an account that yields interest and also allows the depositer to withdraw funds with short notice or no notice at all. Every bank that offers an account of this type has its own rates and terms and conditions. It is advisable to choose the money market rate that does not only offer high interest rates but also has reasonable terms and conditions that are suitable to your needs and prevailing circumstances.
On the other hand, a CD is a kind of deposit that pays a higher interest rate but in return for this higher rate, imposes more restrictions. Typically you cannot withdraw funds for an established period of time without incurring a penalty. For this reason, CD's are often referred to as time deposits. The philosophy behind a certificate of deposit is that a depositor earns a higher interest rate as because the depositor is prevented from withdrawing the funds that he or she deposited within the agreed duration of time.
In summary, the two factors you must consider in choosing a money market or a certificate of deposit are the interest rates and the length of time you want to have the money tied up. A high interest rate does not necessarily mean that it is the best deal and sometimes the rates are not what you think they might be. Usually, the higher interest rates are accompanied by stricter conditions. Therefore, you should always study and analyze the terms and conditions imposed if they are suitable to your current situation. - 23218
A passive income is possible through the interest you earn from the money you have deposited. If you are serious about saving money and earning a continuing income through bank deposits, you should consider some important factors. The first thing you should do is to study the money market and certificate of deposit rates to understand what they pay.
A money market account is an account that yields interest and also allows the depositer to withdraw funds with short notice or no notice at all. Every bank that offers an account of this type has its own rates and terms and conditions. It is advisable to choose the money market rate that does not only offer high interest rates but also has reasonable terms and conditions that are suitable to your needs and prevailing circumstances.
On the other hand, a CD is a kind of deposit that pays a higher interest rate but in return for this higher rate, imposes more restrictions. Typically you cannot withdraw funds for an established period of time without incurring a penalty. For this reason, CD's are often referred to as time deposits. The philosophy behind a certificate of deposit is that a depositor earns a higher interest rate as because the depositor is prevented from withdrawing the funds that he or she deposited within the agreed duration of time.
In summary, the two factors you must consider in choosing a money market or a certificate of deposit are the interest rates and the length of time you want to have the money tied up. A high interest rate does not necessarily mean that it is the best deal and sometimes the rates are not what you think they might be. Usually, the higher interest rates are accompanied by stricter conditions. Therefore, you should always study and analyze the terms and conditions imposed if they are suitable to your current situation. - 23218
About the Author:
Are you interested in finding out about the best CD rates? If so please visit my site Best Money Market Rates to find out more.
posted by X - Men @ 1:44 AM
0 Comments
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home