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Forex Trading Tips - What is a Money Market Account and How Does it Work?


A money market account is actually a very low risk type of savings account. What happens is that the interest rate it pays will fluctuate with the actual prime rate. The reason for this is because all financial institutions use cash from these money market accounts for investments and also to use to lend out to other people. There will be higher interest on the money market accounts when the banks receive more interest on the money that they are loaning out to people.

You can pretty much go to any bank and open up a money market account. You can also go to credit unions as well as mutual fund companies. The accounts generally set up to where one dollar is going to equal one share. These types of accounts will usually require a larger balance to open with than a traditional savings account. This can range anywhere from $1,000 to $2,500 as a minimum opening balance. There also are quite often penalties or fees if your account happens to drop below the minimum opening balance. All you have to do to open one of these accounts is to fill out the paperwork required at the financial institution of your choice and then either write them a check for the amount or give them the cash to open it.

You can add money to this kind of an account at any time and this can be done by check, an account transfer, a bank transfer or a wire transfer. Since your bank or financial institution makes money off of what you put in your account, they often will offer different kinds of incentives for you to buy more of the shares. They will usually increase the interest on your account if you have a higher account balance.

Your money market account will usually guild interest on a daily basis and it's paid to your account on a monthly basis. This type of interest building is considered a benefit for the account holder. The institution is actually paying you interest on the interest they paid on the previous day. The yield will how ho much the account will pay over the course of a year. This is generally higher than the actually interest rate because of the compounding of interest on a daily basis.

When you have a money market account you need to realize that you will be restricted to just how much that you can withdraw and how often that you can do so. This can vary from $100 to $500 and it just depends upon the account that you have. There are also sometimes restrictions on just how many checks that you can write or how many times you can withdraw each month. There are fees sometimes for writing checks as well.

There is no amount of time that you are obligated to keep your money in one of these accounts and you can take all of your money out and close out the account any time you want without there being any kind of penalty or fees. This is a good way to earn some extra money off of a savings type account especially for someone who might be interested in having some cash on hand to open up a Forex trading account.



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