Understanding How Money Market Accounts Work
Money market accounts can grow your money. Account holders often use these accounts in place of or in addition to a savings account because they earn a solid rate of return often greater than that earned from a savings account. Read below if you want to know more about how a money market account from GCS Federal Credit Union works.
Deposited Funds Earn Interest
A minimum initial deposit of $2,500 will earn interest just like a savings account. The difference is that yield is higher and you can still use the account like a checking account, with some limitations.
Different Tiers Receive Different Rates
Generally, the greater the balance you maintain, the more dividends you’ll receive at a better rate. There are three tiers of account balances:
- Tier 1 balances are between $2,500 and $9,999.99.
- Tier 2 is $10,000 to $24,999.99.
- Tier 3 is anything $25,000 or greater.
The more you regularly deposit into your money market account, the more you will earn in interest.
The Credit Union also Benefits from Money Market Accounts
In exchange for these higher yields, the credit union uses this pool of money from several money market account holders to make loans at an interest rate that covers your yield. Each account holder’s funds are insured up to $250,000 by the National Credit Union Administration (NCUA).
Account Holders Receive Dividends
Dividends are compounded at the end of each month. On the last day of the month, your account is credited with the dividend.
Some Transaction Limitations Do Apply
As with a checking account, there are transaction limitations. Money market account holders can make six withdrawals during any month. Of these six, three may be made in the form of a check. Checks have to be written in amounts of $300 or greater.
All accounts at GCS Federal Credit Union , including money market accounts, are insured by the NCUA. If you’re interested in a new checking account, an auto loan, or a higher-yielding alternative to a savings account, call us today at (618) 797-7993.