- Open an Individual Retirement Account money market account if you're saving money for retirement that you'll need in the immediate future. This account is perfect during shaky stock market times because it is FDIC insured up to $250,000. It's also an alternative if you are nearing retirement age but haven't saved the necessary funds.
Interest on the IRA money market account is not taxed until it's withdrawn and is compounded as long as you have the account. IRA money market account tax rules are similar to those of a regular IRA account. You cannot withdrawal funds without penalty until you reach age 59-1/2. Minimum yearly withdrawals must continue until age 70-1/2. - Tiered money market accounts reward owners with higher interest rates for maintaining a higher average balance in the account. The more your money grows the more interest you'll earn.
Many financial institutions offer three or four tiers to their money market accounts. When your money reaches a certain threshold, your interest rate is increased. For example, for $4,000 you could earn 2 percent annual percentage yield. If you make a few deposits and now your account is hovering around $10,000, your APY is kicked up to 2.5 percent. - Some financial institutions are offering higher money market rates to customers who solidify their relationship with their institution. Banks and credit unions want to be your primary financial institution and the more products and services you have the more deeply rooted you are as a customer.
To encourage this relationship, some financial institutions have created a special money market rate structure for customers who open other important products and services such as a checking account, home equity loan and e-services such as bill pay and direct deposit. Money market rate hikes could be tiered based on your average daily balance or the financial institution could give you a standard 1/4 or 1/2 percent rate increase from its standard money market rate.
IRA Money Market
Tiered Money Market
Relationship Money Market
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