Today you told your friend how happy you are with you savings account balance. Your friend asked what rate of interest your bank is paying on the account. When you told her, she suggested that you would do much better with one of several money market accounts. Take this quiz to help you decide where to put your money.
What is a money market account?
a brokerage account used for stock trading
a bank account for exchanging currencies
a savings account with special conditions
What is the difference between a money market account and a regular savings account?
A money market account pays a higher rate of interest than a savings account.
A money market account carries a higher risk if dollar trading takes a dip.
A money market account is not insured like a savings account.
What amount do most banks require that you maintain for a minimum balance in a money market account?
$750 to $1,150
$1,000 to $2,000
$2,000 to $2,800
What is another difference between money market accounts and savings accounts?
Money market accounts allow an account holder to write a limited number of checks.
Money market accounts allow the account holder to withdraw 50 percent of the balance without a fee.
Money market accounts allow the account holder to make an unlimited number of withdrawals a month.
Is money that is deposited in a money market account insured against loss if the bank should fail?
insurance is optional
What year was the Federal Deposit Insurance Corporation created?
What is the primary method banks employ to make money?
Banks make most of their money by lending money at a higher rate of interest than the interest that they pay on deposits.
Banks make most of their money by charging fees for processing money instruments like checks and bonds.
Banks make most of their money by investing money on deposit on stocks and bonds.
How do banks typically calculate the interest that they pay on a money market account?
Interest is calculated on the current balance in your account on the last day of a month.
Interest is calculated on the money in your account compounded daily and paid monthly.
Interest is calculated on the average monthly balance in your account calculated on the last day of a month.
How much will a bank be likely to charge you for every withdrawal that exceeds the maximum allowed in a month?
$3 to $5
$5 to $10
$12 to $15
What is a key to keep in mind when working with your money market bank account?
To make the most on your money, do all of your banking with a money management account.
Treat your money market account like a savings account and make regular deposits.
You will only earn compound interest on a money management account if your monthly deposits exceed $500.