Money Market Savings Account Rate

Have you ever wondered how the banks make their money? Not the money they make from you in interest charges on loans and fees on accounts, how do they do business? Banks need you as more than just customers, and for more than just the fees when you bounce a cheque; banks utilise your loans and deposits, to trade on the money market. Billions of dollars are turned over daily on the Australian money market alone, and it is no longer just the banks who can profit from those investments because money market savings accounts are more accessible than ever for you to get in on the market too.

How Are Money Market Savings Account Rates Determined?

A money market savings account behaves similarly to a traditional high interest savings account, so while you’re earning interest on a larger scale, your money can stay just as safe as it does in a normal bank account. The money market rates are calculated depending on:

• A minimum opening balance. Money market accounts have a higher minimum opening deposit requirement than many other accounts or investments on offer. As a result, the interest rates offered are tiered to go even higher, the more you deposit, to encourage you to invest more money with the bank, so they can invest it in the money market. Therefore, an entry level money market account offers a higher interest rate on balances, and as your balance increases so too can your interest rate.
• A higher balance pays a higher interest rate. Money market accounts are generally at call accounts, where you can make deposits and withdrawals in branch, online or over the phone. However, if you open a money market account with an initial deposit to meet a minimum requirement, you will have to maintain that balance to continue to earn the best rates. At the same time, if you are making regular deposits to your money market savings account from your wages or other income, you can qualify for a higher interest rate on a higher balance.
• If you choose to fix, you can earn a higher interest rate. Money market accounts can also give you the option to fix your balance for a certain term, similar to a term deposit account. The interest rates offered for fixed money market accounts are often higher than the variable interest rates available on at call money market savings accounts. Similarly, if you invest a larger balance in a fixed money market account, you can qualify for even higher interest.

Benefits of a Money Market Savings Account

Once you know how to secure the money market account with the best rate, you can seek out the other benefits of money market investments too. For example, money market savings accounts:

• Are a safe high yield investment. A money market savings account is just like a regular high interest savings account which is paying you higher interest. Where your bank is using your deposits to invest in their own interests in the money market, a money market savings account is not a literal investment where your principle can go down due to a bad choice. Unlike a money market fund, a money market savings account is primarily a bank account, and so all Australian banks are required to keep a portion of all their deposits in reserve to cover withdrawals while they work the market. As a result, your funds are never in any danger of being lost on the money market.
• Interest is calculated daily and paid monthly. On at call money market accounts, your interest is calculated daily and compounds during the month to be paid regularly as a return on your investment. For fixed money market accounts you will receive interest at maturity, or for terms longer than 12 months you can choose regular payment options.
• The option to take advantage of market knowledge. The banks investing on the money market know more than anyone what could be over the ridge of the financial landscape. Therefore, if a money market savings account provider is offering a great rate on their accounts, and especially on their fixed money market accounts, you have the opportunity to take advantage of that offer.

For more information about money market savings accounts, and tips on how to secure the best rates on your investments of any size, view the Savings Account Finder™ comparison tables here. From our comparison tables you can follow secure links to each providers’ website to find out more about money market accounts, high interest savings accounts and term deposit investments, and even start an online application today.