Understanding Money Market Accounts
Erik Evans, AVP of Commercial Services
Envista Federal Credit Union
Making strategic financial decisions is essential for the growth and success of your business. One such decision revolves around effectively managing and growing your cash reserves.
Money market accounts (MMAs) provide a unique blend of security, high-interest earnings and access to liquidity, making them an attractive option for entrepreneurs looking to optimize cash reserves. Here is an overview of the benefits and features of MMAs and how they can provide value to your financial strategy.
BENEFITS & FEATURES
Key Benefits of Money Market Accounts for Business Owners
Higher Interest Rates: One of the primary advantages of MMAs is their higher interest rates compared to regular savings accounts. This allows your business’ cash reserves to grow faster, maximizing returns without compromising on security.
Liquidity: Money market accounts offer a high degree of liquidity, allowing you to access your funds easily when needed. While there may be some limitations on the number of withdrawals or transfers per month, MMAs still offer more flexibility than other high-interest accounts, such as certificates of deposit (CDs).
Safety and Security: Federal insurance, through agencies like the National Credit Union Administration (NCUA) or the Federal Deposit Insurance Corporation (FDIC) covers MMAs, ensuring your deposits are protected up to $250,000. Additionally, some financial institutions offer excess share insurance, providing protection beyond these federal limits. At Envista, our commercial services team recently introduced a Business Protection Money Market Account, offering protection up to $1.25 million. This is alongside competitive interest rates. This additional layer of security ensures that your business’s funds are safeguarded against unforeseen events.
Comparing Money Market Accounts to Other Investment Options
While MMAs offer a variety of benefits and advantages, there are still plenty of options available to help you safely earn interest on your money. Here are a few additional options to consider.
Business Savings Account: This is the most basic type of account designed for helping you save. They also provide plenty of flexibility and typically have no or low minimum balance requirements to establish, as well as minimal fees, if any.
Business Certificates: This type of account offers fixed rates that are generally higher than a regular business savings account or a money market account. At Envista, they require no setup or maintenance fees and offer a wide range of terms available, from 90 days to 60 months. The downside of a certificate is that it typically requires you to keep your money in the account for the fixed period.
To make the best choice for your business, consider your short- and long-term financial needs. Our expert team at Envista is always available to help walk you through the options and determine which choice will help you accomplish your goals.
TK
