If you already have a savings or checking account, you may hear about or see signs for money market accounts but not know whether you need yet another account with your bank. However, money market accounts may offer you benefits at very low risk compared to other investment vehicles. Here are some things you should know about opening a money market account.

Interest Rates are Higher Than Savings Accounts

One of the things that may attract you to a money market account is that the interest paid on your account is higher than you might expect if you only had a savings account. Money market accounts typically require much higher initial deposits than savings accounts for this reason; the bank is paying you a higher return on your money because you are investing more money into the account.

You Can Make Withdrawals

Money market accounts, even though they are collecting interest, can also be the source of financial assistance if you need money right away. Many of these accounts issue you a checkbook after you open your account so that you can write checks or make withdrawals.

However, bear in mind that you are likely not be able to do as many withdrawals in a month as you might with a checking account; that is because these kinds of accounts must adhere to Federal Regulation D, which limits the number of checks and automatic withdrawal transactions you can set up with a money market account. That is also beneficial to you, as it helps you remember that these accounts serve as an investment vehicle and not really to transact your day-to-day banking business.

They are Different than Money Market Funds

One easy mistake to make when signing up for a money market account is that you accidentally sign up for a money market fund. These funds are not the same as money marketing accounts; the funds are typically not protected by the FDIC and can lose all of their cash value as the market fluctuates up and down. Money market accounts, on the other hand, are protected, and there is little risk that your money will lose value as long as it sits in the account collecting interest over time.

Shop around for money market accounts at local banks, such as Rio Grande Credit Union, and brokerage companies to find the money market account that best suits your particular financial needs. You will soon start to see your money appreciate in value.