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Money Market Accounts
Banks generally offer two types of Money Market Accounts – those with the functionality of a transaction account and higher interest rates than a savings account and those that are structured as investment deposits with less transactional functionality. The accounts compared on this site are of the former – Money Market Transactional Accounts.
Most of the transactional Money Market accounts today are accessed through the ATM network, internet, telephone and cellphone banking as well as the branch, and some a chequebook.
The benefits of a Money Market Transaction Account include easy access to your money and the ability to transact from your account coupled with a higher rate of interest than savings or cheque accounts. The money market transaction account is similar to any other investment or savings account; you earn interest on money deposited for as long as it remains in the account.
Some banks limit the transactions permitted on these accounts to deposits, withdrawals and inter-account transfers, while others allow you to conduct the full range of transactions (including stop and debit orders). Most often, transaction fees are structured in ways to encourage you to keep large sums of your money invested. For instance, there may be minimum monthly balance required that exempts account holders from paying fees or enables them to pay lower fees.
The minimum opening deposit can range from R5 000 to R25 000, depending on the bank. The higher the monthly balance, the higher the rate of interest earned. Money Market transaction accounts are administered as a normal investment account and interest is calculated on a daily basis and capitalised to your account monthly.
One of the main advantages of money market transaction accounts is that your money is not locked into a specific investment term, as is the case with a fixed or notice deposit. Moreover, the interest rates are usually more stable than with money market unit trusts. Although the rates may vary, they will rarely move unless the prime lending rate changes.
GLOSSARY
Credit interest rate – interest paid to you if you have credit in your account
Fee rebate option – maintain a minimum balance (specified by the bank) in your account and receive cash back
Penalty fees – fees payable for any wrongdoing on the account (ie denied transactions, returned payments etc)
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