SACRAMENTO, Calif. — New Year’s resolutions are top of mind as 2023 winds down, and a big one for many people is to get the most out of their money.
It starts with your savings, and when it comes to savings, it’s all about the interest rate.
A finance expert explains why opening a money market account could help you make more money on what you already have.
“We want to make sure that people have their rainy day money,” said Joseph Eschleman with Towerpoint Wealth. “It's important to know you've got your security blanket. You have your easily accessible cash. That's not going anywhere and that is insured.”
Money market accounts typically offer higher interest rates than basic savings accounts. The higher the rate, the faster your money grows.
ABC10’s Lora Painter did some digging and found most money market accounts offer interest rates of 3% to 5%. Compare that to basic savings accounts offering up to 1%.
“If you have $100,000 earning 1% versus $100,000 earning 5%...that's a $4,000 a year difference in interest,” said Eschleman.
Think of your money market account as another tool in your financial arsenal along with a checking account and basic savings account.
“Don't rock the boat, keep your checking account open if you're used to and comfortable with that, but with the bigger amounts of money that you have in savings, go out find a better rate and get more interest into your pocket,” said Eschleman.
And, don’t be afraid to read the fine print.
ABC10 asked Eschleman how some banks can offer higher interest rates. He said online-only banks do not have the additional costs and overhead of brick-and-mortar stores, allowing them to offer more attractive interest rates.
Make sure the bank you choose is Federal Deposit Insurance Corporation insured, meaning you’re protected up to $250,000.
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