By Peter McDougall, BankingMyWay
When the price of gas at the pump was over $4 last summer, consumers did whatever they could to cut back on driving: They carpooled, biked to work and switched to public transportation. Now that gas is at a four-year low, however, you may be slipping back into your old driving habits. Instead, consider regaining your mid-summer, fuel-conscious ways and put the money you save into a money market account (MMA).
MMAs are an excellent savings tool for money that you can set aside a few dollars at a time. Though MMAs carry restrictions on the number of withdrawal transactions you can perform -- often six per month, three of which include writing checks -- deposits are unlimited. That means you can deposit a few extra dollars into your gas-money MMA every time you fill up your car.
And that extra gas money will be working harder for you in an MMA than in most other deposit accounts. Nationally, Bankingmyway Money Markets offers an average 0.72% interest rate, whereas Bankingmyway Savings accounts only carry an average interest rate of 0.35%.
Short-term CDs offer higher interest rates -- 1.22% and 1.57% for three- and six-month CDs, respectively -- but you'd have to save up your money for a few months before buying a single CD. With an MMA, you could start saving right away.
Besides, interest rates on MMAs can vary widely from lender to lender. In North Carolina, for instance, rates offered by banking institutions are around the 2.5% rate from the Bank of the Carolinas (BCAR) and the 2.02% from Carolina Trust Bank (CART).
Just be careful of the minimum balance requirements on some accounts. A few institutions in North Carolina, such as First Community Bank (FCBC), don't require minimums, whereas others, such as Wachovia (WB), ask that as much as $10,000 be kept in the account.
For more rate offers in your area, go to bankingmyway.com and enter your ZIP code.
This article was originally posted in January, 2009. Rates may have changed since publication.
—For more ways to save, spend, invest and borrow, visit MainStreet.com.