Make Your Investments Work For You Five Steps to Higher Money Market Rates

When you want an investment strategy that offers high interest without much risk, a money market account might be the perfect solution. Interest rates for money market accounts are generally based on rates that come from the Federal Reserve. Of course, the numbers can change daily, as the market goes up and down throughout the week. However, there are a few steps you can take to find an account with the best money market rates.

1. Do Your Research
Before opening a money market account, you should shop for offers from multiple banks. While rates fluctuate in accordance with the economy, some accounts also factor your rates based on your initial deposit or the amount you have invested. To find the best money market rates, determine how much you’re ready to invest upfront and how much you’ll be able to contribute in the future. With these numbers in mind, you can choose an account that offers great rates for your budget.

2. Have a Plan
You’ll typically find the best rates for your money market account when you’re able to make a large deposit upfront. Most banks have a general minimum balance requirement for your first deposit. Some banks also categorize your account based on your deposit amount or the amount you’re planning to invest later on. If you’re close to the minimum required amount for the next category, it might be worth waiting to invest until you have more saved, as you’ll be able to secure a higher rate.

3. Choose the Right Time to Invest
Keep an eye on money market rates before opening your account. Though you’ll never be able to get a guaranteed rate, you can predict what the market is likely to do in the short-term future. If the market is experiencing a low period, you might want to wait a couple months before putting your funds into a money market account. You won’t lose money by investing too early, but you could earn more by waiting just a little longer. Of course, you shouldn’t put off your investments indefinitely, as this causes you to effectively lose money you could be earning. Consult a financial adviser to determine the best time to open your money market account.

4. Watch for Better Offers
As you invest, look for offers that allow you to upgrade your account status. Many banks will raise your account to the next category when you reach a new investment tier. By paying attention to the amount you’ll need to invest, you can create an effective strategy for putting money into your account. It doesn’t hurt to look for deals from other banks, but you’ll typically have greater success by maximizing your existing account’s potential. Additionally, if a new investment will cause your rate to change, you should try to coordinate the deposit with a period of market growth.

5. Keep Your Balance Stable
Money market accounts are flexible, offering many of the same benefits as checking and savings accounts. You can withdraw money, write checks and make deposits like you would with a traditional checking account. However, you will find better results when you treat your account like a savings account. Avoid taking too much money out at once, as you should be careful to never let your balance drop too much. Maintaining a high balance can make you eligible for better money market rates and upgrades on your account. If your account has a maximum allowed balance, consider investing your surplus into another money market account or in another investment vehicle, such as a certificate of deposit or an individual retirement account.