Money market funds have the advantage of giving you the flexibility of a checking or savings account, but with a bigger bang for your investment in the form of higher interest rates. It’s a relatively safe investment, but you still should know your options before pouring money into these funds.

Not all money markets funds are the same

There are four basic types of money market funds you can invest in: U.S. Treasury funds, U.S. government and agency funds, diversified taxable funds and tax-free funds.

• U.S. Treasury funds. These offer lower yields than other types of money market funds, but also offer the lowest risk. If you have a low risk tolerance and don’t mind the lower yield, these funds are for you. They are tax exempt.
• U.S. government and agency funds. These funds are a little riskier than a U.S. Treasury fund, with a slightly higher yield, but not much more.

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Money market accounts can give you a better return than a run-of-the-mill savings account, but they have higher minimum balance requirements. Since the amount of interest you’ll get on a money market account varies from one bank to the next, finding the best money market account requires you to shop around.

A money market account is a savings account offered by banks and credit unions. With a money market account, you typically get higher interest than a traditional savings account, but are required to have a higher minimum balance. Many of the best money market account rates are reserved for account holders with balances of $10,000 or more. Unlike with traditional savings accounts, you’re allowed to write as many as three checks per month with a money market account.

Do your homework

Checking with multiple banks before opening up an account will ensure you find the best money market account. F Read more…

If you’re looking to grow your money in a low-risk account, you probably already recognize that your standard savings or checking account may not yield much of a return. Rather than look at annual interest earnings sheet of a few pennies, you can explore money market accounts for a safe way to an increased return. Here are a few guidelines for finding the best money market rates.

Save more to earn more

Many banks offer money market accounts with interest rates that vary depending on your account balance. Once your balance crosses incremental thresholds, you reap the reward of higher interest rates. Do your research, though. At many banks, the best money market rates are reserved for big balances over $10,000. If you plan on carrying a smaller balance in your account, a high-yield checking account may be a better option than an MMA.

Go direct

Many customers are turning to direct online banks for higher interest rates. Read more…

Savings accounts and money market accounts are two of the most basic ways to stash some cash. Savings accounts come in two flavors, passbook and statement. Money market accounts generally pay slightly better interest. Both types of accounts are currently insured up to $250,000 by the Federal Deposit Insurance Corporation, or FDIC, or the National Credit Union Share Insurance Fund, or NCUSIF, at credit unions.

Passbook vs. statement savings account

With a passbook account you’re given a booklet to enter deposits, withdrawals and interest. With a statement savings account you simply receive a statement, usually once a month, detailing transactions. You don’t usually get to pick — most banks offer one or the other.

At a glance

Both savings accounts and money market accounts are liquid, meaning you can get your money out at any time.

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All rates fell by 10 basis points:

• High Yield Savings Account – 1.50% APY (was 1.60%)
• Money Market Savings – 1.45% APY (was 1.55%)
• Advantage Savings – 1.40% APY (was 1.50%)

Refer to the Bank of Internet review and the Bank of Internet overview for more details.

Hat tip to reader who mentioned this in the Open Discussions Thread.

Tags: Bank of Internet USA, banks, rate changes, nationally available, savings accounts