Natalie Buxton

Money Market Account Interest.  A Money Market savings account is very much similar to a savings account in the sense that you invest cash in the bank and then you get a matching interest depending on the amount that you put in. The only variance is that the bank utilizes your money and loans it to other individuals with a higher interest rate.  The interest generated from money markets is compounded each day and paid every month with rates based on the going rate of the bank at the time the transaction was made. Depositors should be mindful about the existing interest rates before putting their money on money market as these money market rates rise and fall over time.

BANKER’S ACCEPTANCE. It is a negotiable instrument or order of payment withdrawn and accepted by a bank. It is similar to a postdated draft from a client to the bank for a sum available throughout a particular time frame, generally six months. Receipt of this draft makes it possible for the bank to trade or sell it in secondary markets. Worldwide trade depends on Banker’s Acceptance. Here’s an illustration of how it works: say there is a trade ongoing between an importer and an exporter and the importer cannot acquire financing from the exporter. The importer may use a Banker’s Acceptance from his bank to consummate dealings in the bank’s behalf; he then makes an arrangement to pay the bank and issues a time draft on the bank. The bank then marks down his check, and offers the funds to the importer but take note that the total is less than the face value of the original draft. The importer uses the said amount to pay the exporter. It is now the bank’s discretion to utilize this draft either to their collection or to resell or rediscount it in the secondary market.

TREASURY BILLS. The most popular market security are T-bills. T-bills are short-term savings and are issued in 3-month, 6-month and one-year time periods. T-bills are traded competitively or non-competitively.  Non-competitive means you cannot propose for the amount of security that you will receive other than what is stated at the time of the auction.  Competitive bidding, however, gives you a more flexible take for the reason that you can bid higher than the precise returns. If they find your bid too much, they may deny you of the T-bills or they may still carry on with the bid but only present you with a portion of what you bid for.

T-bills are marketable for the reason that they appeal to the broad single investors. They are more reasonable than other money-market savings. T-bills are generally offered in quantities of $1,000, $5,000, $10,000, $25,000, $50,000, $100,000 and $1 million.  T-bills short tenure also make them attractive to traders.  You can acquire a T-bill for a 4-week period.  But the downside to this is that your funds is unavailable for the 4-week period of time with no opportunity to extract it earlier than maturity as with CDs.

$1000 portions are available for acquisition.  Amounts larger than a thousand will not be given and has to be invested in other money market type accounts.