Why You Should Switch to a Money Market Account

  • With money market accounts you earn 25 times more than a traditional saving account
  • Money market accounts are FDIC insured, meaning the government fully protects any money market account under $250,000
  • Most money market accounts have limited functionality such as no checks and only a few withdraws per month
  • The rate on money market accounts also changes as the economy changes 

Make $1,000 Passively in 5 Years

Do not underestimate money market accounts. Anyone who uses a major bank should switch from a savings account to a money market account. Traditional saving accounts only pay you a .09% interest each year.

Regardless of what account you have, banks are going to loan your money out to other people, businesses, and governments. Why not sign up for a money market account that pays you around 2% interest, earning you 25 times more?

Thus, simply switching to a money market account can make you about $1,000 more in 5 years with an initial deposit of only $10,000. This is huge. 

Banks Pay You Interest Because They lend Your Money Out

Savings accounts are deposit accounts held at retail banks. When you deposit money into an account, you are lending money to that bank. The bank then pools your deposit with the deposits from other people and keeps track of it through ledgers, or records of your name, address, account balance, and other information. In summary, individual checking accounts don’t exist — meaning that no money is physically in your account — instead, money is just all collected in a couple of central locations.


You Earn More at Smaller Banks

Furthermore, the banks determine how much interest to pay people based on the current economy, and rates vary from .01% to 1%. Smaller banks must fight for your attention and offer higher rates of return. Larger banks such as Bank of America offer only .06%. Using an average rate of .09%, a savings account will pay you a total of $45 after 5 years – not a lot.

Banks Loaning Your Money Out

To make money themselves, banks loan your money out to businesses, countries, and people. For example, Donald Trump borrowed $ 2 billion from Deutsche Bank, a multinational German bank, for two decades. Today, Deutsche bank is heavily investigated for this relationship since fraud and other questionable elements were likely involved. However, not all your money is going to transactions like this.

Also, Banks Make Money From “Maintenance” 

Besides, banks also make money by charging you “maintenance” and over drafting fees. Banks have been making money since 2000 BC and in Assyria and Babylonia, and will probably continue to do so. We need banks to safely protect our money, borrow money, and retrieve the money. So why not use money market accounts to get the most out of banks? Also, use their credit cards to your advantage too! 

Banks Do Not Want You to Use Money Market Accounts!

Money market accounts are government-insured bank accounts that pay high-interest rates. They work like a hybrid saving and checking accounts. You are unlikely to notice any difference. Most banks try to steer customers with high balances away from a money market account since these accounts can be costly for banks. This is probably the best reason to sign up for one.

Money Market Accounts Do Not Have Any Risks – at All

If you feel unsafe about money market accounts, you should know that the U.S government protects you from any potential losses. Money market accounts are FDIC insured, meaning that the Federal Deposit Insurance Corporation (FDIC), an independent agency of the United States government, protects 100% of your checking, savings, certificates of deposits, and money market accounts under $250,000 – a policy that was enacted right after the 1929 stock market crash

The downside is that you might not have enough cash to open a money market account since some banks require an initial deposit of $1,000 or more to open. Likewise, any accounts that do not maintain this requirement will face maintenance fees. Lastly, money market accounts limit the number of checks, withdraws and deposits you can make per month. Therefore, you should treat this more like a savings account.

Let Us Take a Look at an Example

Capital One offers a 1.90% money market account. The account has no monthly fees and is FDIC insured up to $250,000. However, if you have an account of less than $10,000, the bank pays you .85% instead of the 1.9% advertised.

Still, based on the company’s disclosures, customers should be aware that interest rates on money market accounts can change too. How that interest changes —yearly, monthly or daily – will have a substantial impact on your return. But these accounts are still attractive since they offer higher interest rates than savings accounts.

Lastly, this money market account allows you to make 6 withdrawals or transfers a month. And unfortunately this money market account also does not come with a debit card and you can’t write any checks.

In 5 years, with a $10,000 deposit and an interest rate of 1.9%, compounded annually, you will have $10,986, $941 more than a savings account. If you decide to add $10,000 each year, you will have $63,910, or an extra $3,910! You can quickly calculate it here if you don’t believe me.


Money market accounts take only 10 minutes to open and will make you thousands of dollars in the long run. After just one year, you will earn enough for a free set of Apple Air pods. 

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