What Is Money Market Account Interest?

Money Market Account Interest. Much like a regular savings account, a Money Market savings account earns a matching rate of interest determined on the amount of the deposit. The noteworthy modification is the bank loans the funds at a higher rate of interest to other individuals. The interest generated from money markets is compounded daily and paid every month with rates based on the available rate of the bank at the point the transaction was made. Depositors should be cognizant regarding the existing interest rates before placing their money on money market savings as these rates change over time.

BANKER'S ACCEPTANCE. It is a negotiable instrument or time draft drawn on and honored by a bank. It acts much like a postdated check that is issued to the bank by the bank's customer to pay a sum of funds at a specified period of time, generally inside a 6 month period of time. When the bank accepts this check, it may be traded in secondary markets to a great extent like any other claim on the bank. Banker's Acceptance are frequently used in international trade. Here's an illustration of how it works: say there is a commerce ongoing between an importer and an exporter and the importer cannot obtain financing from the exporter. The importer could use a Banker's Acceptance from his bank to carry out transactions in the bank's behalf; he then makes an promise to pay the bank and issues a time draft on the bank. The bank then marks down his draft, and offers the cash to the importer but be aware that the amount is a smaller amount than the face value of the initial draft. The importer reimburses the exporter the said amount. It is now the bank's discretion to use this draft either to their collection or to resell or rediscount it in the secondary market.

TREASURY BILLS. T-bills are the most profitable money market security. T-bills are short-term reserves and are issued in 3-month, 6-month and one-year maturities. T-bills are traded competitively or non-competitively. Non-competitive limits your bid to what is stated at the time of auction. Competitive bidding, on the other hand, gives you a more flexible take because you can bid higher than the specified returns. If they find your bid too high, they may deny you of the T-bills or they may still continue with the bid but only pay you with a percentage of what you bid for.

T-bills are profitable because they appeal to the general individual investors. They are more reasonable than alternative money-market investments. T-bills are commonly obtainable in amounts of $1,000, $5,000, $10,000, $25,000, $50,000, $100,000 and $1 million. Another characteristic that makes T-bills saleable is as a result of its brief maturity. A T-bill may be had for as short a time as four weeks. The draw back of this is that your money is not fluid for the period.

$1000 portions are offered for purchase. Amounts greater than a thousand will not be given and must be invested in other money market type accounts.