Banks also offer money market accounts that invest your money in short-term loans to government agencies and corporations. These accounts offer some of the benefits of both savings accounts and checking accounts. Because the minimum balance is high, a money market account is usually free, and you also get free checks to write against your account's balance. Banks review the yields they offer on a weekly basis, and frequently lower or raise the rates just as often. That means the rate that's offered when you open your account may be dramatically different a year later, or even a month later.
Banks can quote rates that are compounded daily, weekly, monthly, quarterly or yearly.
Over a period of 12 months, interest that's compounded yearly could give you less money than a lower interest rate that's compounded daily. The yield on CDs is guaranteed for whatever period you've agreed to tie up your funds. If so, push on to the next part of this lesson . . . Setting priorities 2. Making a budget 3.