What is the difference between a savings account, Cd and money market

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Is there any RISK to a money market... I ask this cause one of my major cds just rolled over and i need to put it into something ... My credit union said a money market but it sounds too good to be true


REG savings pay .25 %

Cd 3 month Pays 1.1 %
Cd 6 month Pays 1.8%

but the Money market that can be touched and removed at any time pays 2.1%


something just does not sound right there

Why would not everyone go into the Money market at 2% instead of a CD at 1 %


can you lose your cash in a money market .... thanks AGAIN
 
In theory, a money market account can lose money since it's invested in short-term commercial paper but it almost never does. However last summer, I believe, a major money market account did "break the buck" (lost money in the Lehman Brothers fiasco) but I think the government intervened to ensure no one lost money... I'm not sure of the details. Check the fine print though, often you need a minimum balance in order to get the maximum rate of return and to avoid maintenance fees.
 
[quote name='dopa345']In theory, a money market account can lose money since it's invested in short-term commercial paper but it almost never does. However last summer, I believe, a major money market account did "break the buck" (lost money in the Lehman Brothers fiasco) but I think the government intervened to ensure no one lost money... I'm not sure of the details. Check the fine print though, often you need a minimum balance in order to get the maximum rate of return and to avoid maintenance fees.[/QUOTE]

thanks..

credit union says there is no chance of loss BUT i dont see why they would be paying so high. I mean 2% is even higher then what they pay on a 1 year CD

also be interesting to see how they pay intrest on it.. If they just pay interest on the end of the month balance then i should get almost 90 bucks tomorrow ... BUT since i opened it on the 15th it might just be 45 bucks (if added daily)

and dont know to add more money into the money market with this new CD cash or not...

seems 2% if a very good return with a NO RISK type of market today
 
Wow, it's sad to see CD and savings rates now. Back when I worked at a bank (about 10 years ago) CDs got you 5-6% and savings accounts were at least 2%.

Remember that banks take the money you "save" with them to fund their own business and investments. So the longer you guarantee the money will be there, the higher the rate they will give you.

Here's a super basic rundown:

Savings

  • No risk
  • Access at any time (some limits to # of accesses per month)
  • Generally low minimum balance
  • Low return
Money Market

  • Mild risk due to money being directly invested
  • Higher return
  • Higher minimum balance
  • Generally restrict # of accesses per month (usually not an issue)
CDs

  • No risk
  • Higher return
  • Higher minimum balance generally required
  • No access without penalty
 
[quote name='BigSpoonyBard']Wow, it's sad to see CD and savings rates now. Back when I worked at a bank (about 10 years ago) CDs got you 5-6% and savings accounts were at least 2%.

Remember that banks take the money you "save" with them to fund their own business and investments. So the longer you guarantee the money will be there, the higher the rate they will give you.

Here's a super basic rundown:

Savings

  • No risk
  • Access at any time (some limits to # of accesses per month)
  • Generally low minimum balance
  • Low return
Money Market

  • Mild risk due to money being directly invested
  • Higher return
  • Higher minimum balance
  • Generally restrict # of accesses per month (usually not an issue)
CDs

  • No risk
  • Higher return
  • Higher minimum balance generally required
  • No access without penalty
[/QUOTE]

mild risk means what are the odds of losing money in this.. Right now i got around 50k and might put another 10 to 15k in next week......

Dont know to take it out of the money market and just put it back in a CD... Hate to lose any of it

also wouldnt this be against the law... if it has a MILD RISK how can the credit union get away with saying

There is no risk of losing your cash???

I think 10 years ago cds were only getting 2 to 3 %... It was like 5 years or so the CDS were up to 5 to 6 %
 
The odds of losing money in a money market account is extremely low. Even if the very unlikely situation that it loses money, the institution will do everything it can to make up the difference, even eat the loss since the stigma of having a money market fund that lost money for its investors would be so high that it would be avoided at all costs.

If you're so risk averse, maybe you should consider T-bills.
 
Why not just open up an ING or comparable account? You're going to get close to your 2% there anyway with "zero risk" and your money is available just like anywhere else.
 
First off. Shop around for CD rates as they vary significantly between banks. As long as the bank is FDIC insured who cares if you have never heard of it.

Second off. If you are looking for 5 - 6 % returns and don't mind a little risk try investing in high dividend paying stocks (Catepillar, Pfizer, etc. etc.). Right now I think catepillar pays about 5 % dividend. (As in you get a 5 % return on the money you invest in the stock)

Third. If you don't have money for an emergency fund, don't invest or put into a CD that you would not have access too. Good luck.
 
Thanks for all of the help... Called today and seems i got 41.90 in interest ...

might just keep the other cash in a .25 savings account cause i will need most of it in the very near time frame..

700 for car insurance
4000+ for a used car i need to buy a newer one
200+ for plates on the cars
ect ect ect
 
I get 1.5 in ING right now in my savings account. Most of my money I locked into a 4.25 1 year CD last October, so it's been earning 4.25% interest as opposed to the 1.5% that the savings rate has fallen to.

Unfortunately, at ING, the CD rates now = the savings rate, meaning unless rates fall again, there's absolutely no advantage to locking your money at the same (or in some cases lower) rate.
 
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