How To Set Up Money Accounts

Introduction

Money accounts in concept are quite similar to savings accounts except with a few functional differences. You can open money accounts just like a savings or checking accounts but you get significantly higher interest rates on money accounts. The major operational difference is that your withdrawal options are limited in money accounts. You can withdraw your money only a limited number of times in a month, usually six times, and every withdrawal is subjected to a fee, typically $5-10. In addition to this, you are required to maintain a minimum balance in your account at any given time. Lets us go through important points in setting up money accounts.

Step 1

Step #1: Evaluate your options

Many banks allow you to open money accounts with them. Check all the offers for important points like fees and service charges on the account, minimum balance you are required to maintain and interest raid paid on your balance. These things vary from bank to bank.

Step 2

Step#2: Understand the process

It’s lucrative to know that money accounts pay you higher interest rate but it’s important to understand how banks manage your money. When you deposit money in your account, bank loans that money out to other people charging a higher interest rate than what they are paying on your account. So basically banks make money from money. That is why they prefer you withdraw as rarely as possible. Interest is compounded daily on your balance in money accounts. This means that banks pays you interest on the interest they have deposited in addition to your principle balance. So the more money you have in account, faster it grows.

Step 3

Step#3: Beneficiary for the account

Each person needs to provide a beneficiary to set up their money accounts. A beneficiary is needed to cover any unforeseen misfortune.

Step 4

Step#4: The safety of your money

The funds in money accounts are insured by Federal Deposit Insurance Cooperation (FDIC) just like a normal savings or checking account. FDIC is a United States government cooperation which provides deposit insurance to guarantee the safety of deposits in member banks. You should take care to open money accounts in banks that are a member of FDIC. You can recognize a bank insured by FDIC by a mandatory sign at their place of business stating that "deposits are backed by the full faith and credit of the United States Government". It is a big assurance given the uncertainty prevailing in current markets.

Step 5

Step#5: Manage your account

When you open money account you receive a small booklet called checkbook register. You can record your opening balance, all subsequent deposits and withdrawals, interest compounded and charges levied in checkbook register. At the end of the month when the bank provides you with an account statement, you can cross check it with your checkbook register. This will help you reconcile your account details.

Tip

You can set up an account for a specified period of time and renew it subsequently. You can withdraw money or cut checks from your money account.

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