Money market investment products are offered by many online banks. Banks use the money invested in market accounts to procure shortterm debt securities offered by the public corps, major banks, and products offered the federal government such as T-Bills (treasury bills.) These investments are generally low risk and the interest rates offered in money market accounts reflect this lower risk factor. Higher returns can be obtained by investing in riskier products.
FDIC Insurance
Money market accounts can be FDIC insured if the bank is a participating member of the Federal Deposit Insurance Corporation. The FDIC has a search tool listed on their website.
Electronic Transactions
Check with the online bank and read the terms and conditions. Online savings accounts are similar to online money market accounts since both investment products can utilize electronic transfers. Checks can also be written to access money but there may be a limit. Etrade only allows three check transactions per month.
Account Minimums and Fees
Most banks have different terms and conditions so make sure to identify:
- Opening Account Minimum Balance(this can be from $1 to $100000)
- Monthly Minimum Balance (a fee may be charged if the minimum monthly average is not met-eTrade charges $10/month if the minimum average monthly balance is at least $1000)
- ATM Fees (some banks will refund their own ATM fees-a fee may still be charged by the bank or company of the ATM that is being utilized for the transaction)
- Check Printing Fees
Read the fine print before signing up.