by Dana George | Updated July 17, 2021 - First published on April 21, 2020
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If you're trying to decide what to do with your stimulus check, why not put it to work for you?
Thanks to the Coronavirus Aid and Economic Security (CARES) Act, 130 million Americans have received a stimulus check, while an estimated 10 million continue to await theirs. If you are wondering what to do with your check, the flexible nature of a money market account (MMA) may make it precisely what you're looking for.
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Take the best features of a savings account, blend them with the best features of a checking account, and you will end up with a money market account. An MMA combines some of the flexibility of a checking account with a decent interest rate.
You set up a money market account in much the same way you'd set up any checking account. You can have your paycheck automatically deposited into it, write checks against it, and manage it online.
The downside is that some money market accounts require you to pay a high minimum deposit. And normally, MMAs allow for only six "convenient" transactions per month, with anything beyond that number incurring a fee. The Federal Reserve has suspended this rule indefinitely during the COVID-19 pandemic. It's now up to individual banks to set their own rules.
Some of the highest-paying MMAs today offer APYs of up to 1.51%, which is about the same as the best savings accounts. MMAs offer more flexibility than savings accounts and more stability than a stock market investment. The interest rates may be lower than usual right now, but what you lose in interest, you gain in security. Look for an MMA that offers a low or no-minimum initial deposit and does not require you to maintain a high balance.
If you are wondering where to put your stimulus check, MMAs have a lot to offer, including:
If you've already received a stimulus check, or expect to receive one soon, it's good to figure out how it can benefit you most. Here are questions you will want to ask yourself before opening an MMA:
There's a lot to like about MMAs, not the least the way an MMA allows you to access your money easily and without penalty. If the coronavirus crisis has taught us anything, it's that flexibility and security are a valuable combination.
Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. The Ascent's picks of the best online savings accounts can earn you more than 8x the national average savings account rate.
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