If you think no matter where you are saving, think again. There are several options for paying your cash, each with different privileges and restrictions.
If you choose a money market account (MMA), you will need to easily use your money, but the account interest rate may be reduced at any time. The Treasury Bills (also known as T-Bills) are the other way around: you cannot achieve your money so easily, but your return rate is guaranteed until you leave the payment to the term date.
As you can see, these two features alone make these accounts useful for very different saving purposes. Here is everything else you need to know before deciding whether MMA or T-Bill is the best goal of your savings.
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The money market account is a bank account that combines the characteristics of a check and savings account, but on average with higher interest rates. For example, MMA often comes with checks and / or debit cards to make it easier to use your expense. They are usually insured by FDIC (or NCUA if your account is considered a credit union).
However, keep in mind that money market accounts often limit the number of withdrawals that you can do each month, and may also be with higher minimum balance requirements than standard savings accounts.
Read more: Money Market Account and Money Market Fund: What is the difference?
The Treasury Law is a short -term debt assessment issued by the US Treasury Department Department to help finance government operations. In essence, it is like a short -term loan that you grant to the Federal Government in exchange for a guaranteed return rate.
The T-Bill maturity options range from four weeks to one year, and the price you earn is determined by the term you choose.
Warshes can be purchased with $ 100 nominal and maturity dates are 4, 6, 8, 13, 17, 26 or 52 weeks. You get your interest when the expense matures. You can also sell early in the secondary market, but your return will be based on market price at the time of sale.
There is no risk of losing money if you keep T-Bill before they mature because the US government guarantees your full contribution and interest.
If you want to buy a T-Bill, the first step is to set the Treasury account. Currently, rates range from 3.61% 52 weeks to 4.11% 4 weeks in accounts.
The main difference between MMA and T-Bills is that MMA is a type of bank account and T-Bill is a certain type of investment.
However, if you are shopping, you will see that some MMA earns similar rates as T-Bills. Although the average percentage of the country’s money market account is 0.59%, some of the best MMA offer more than 4% of the area. Just remember that, unlike T-Bills, MMA norms are variable, which means they can change at any time.
Here’s a look at how MMA and T-Bills compare the common:
Decide whether it is better to decide whether the money market is better at the expense of the money market depends on your financial goals, risk tolerance and liquidity needs. Here’s what to consider when deciding where to save.
MMA is a better choice than T-Bill if you need access to your money for future expenses or if you don’t have savings for emergencies.
By choosing MMA, you will ensure that you can make a withdrawal or write a check when you need to use your money, you don’t have to face any penalty or lose interest. In addition, your balance can earn a competitive interest rate compared to some other types of bank accounts.
Treasury account is a better choice than MMA when all these things are right:
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Savings: You already have an emergency savings fund that you can achieve at any time when you need money.
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Time zone: You want to earn interest for money you don’t plan to spend the next few weeks to a year.
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Comparison of rates: You can capture a higher rate by purchasing T-Bill than depositing money to MMA.
Some people also like to buy treasury bills compared to other low -risk investments such as CDS because they want to support the federal government. When you buy T-Bills, money is used to finance government operations, including things such as infrastructure projects and military expenses.