What is a money market account? | Consumer Financial Protection Bureau (2024)

FAQs

What is a money market account? | Consumer Financial Protection Bureau? ›

A money market account is a type of account offered by banks and credit unions. Like other deposit accounts, money market accounts are insured by the FDIC or NCUA, up to $250,000 held by the same owner or owners. Money market accounts tend to pay you higher interest rates than other types of savings accounts.

A money market account is an interest-bearing savings account that offers a higher-yield interest rate, allowing you to earn faster than a traditional savings account.

The money market refers to trading in very short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders. At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.

It might be worth investing in a money market account when you want a safe place to store your money with a higher interest rate than a checking account, while still having some liquidity features such as check writing. It's ideal for emergency funds or short-term savings goals.

The term money market account (MMA) refers to an interest-bearing account at a bank or credit union. Sometimes referred to as money market deposit accounts (MMDA), money market accounts have some features that are not found in other types of accounts.

A money market account is a type of account offered by banks and credit unions. Like other deposit accounts, money market accounts are insured by the FDIC or NCUA, up to $250,000 held by the same owner or owners. Money market accounts tend to pay you higher interest rates than other types of savings accounts.

“A money market account is an interest-bearing bank account that typically has a higher interest rate than a checking account,” says Bola Sokunbi, founder of a personal finance education website. With some money market accounts, you can even earn more interest with a higher balance.

money market, a set of institutions, conventions, and practices, the aim of which is to facilitate the lending and borrowing of money on a short-term basis. The money market is, therefore, different from the capital market, which is concerned with medium- and long-term credit.

Currently, money market funds pay between 4.47% and 4.87% in interest. With that, you can earn between $447 to $487 in interest on $10,000 each year. Certificates of deposit (CDs). CDs are offered by financial institutions for set periods of time.

Indirectly losing money, however, is a downside of money market accounts. Indirect loss can occur if the interest rates tied to the account fall, thus diminishing the initial return value of your account.

Can you withdraw money from a money market account? ›

You can withdraw money from your money market account whenever you'd like. However, your bank may place limits on how many withdrawals you can make in a single statement period. Additional withdrawals typically incur a fee.

Money market funds are ideal for short-term saving because they invest in highly liquid securities with the objective of capital preservation and income. Money market fund yields have risen above 5%, benefiting from the Federal Reserve raising interest rates over the last couple years.

Both money market accounts and money market funds are relatively safe, low-risk investments, but MMAs are insured up to $250,000 per depositor by the FDIC and money market funds aren't. Banks use money from MMAs to invest in stable, short-term securities with minimal risk that are liquid.

Banks often require a minimum deposit to open the account, then a minimum balance to keep in the account. It's usually much higher than regular savings accounts. This often means $5,000, but can be up to $10,000 at some banks. As stated above, you need to pay a fee if your balance dips below the minimum requirement.

Money market funds, distinct from money market deposit accounts, are a type of mutual fund that are regulated by the Securities and Exchange Commission (SEC).

A money market account is a type of interest-bearing deposit account offered by financial institutions such as banks, thrifts and credit unions.

Money market account: Money market accounts are similar to savings accounts, but they typically require you to maintain a higher balance to avoid a monthly service fee. Both savings and money market accounts have variable rates.

A Money Market Deposit Account is similar to regular savings account, but offers a higher rate of interest in exchange for larger than normal deposits. A Money Market Fund invests in low risk securities.

Money market accounts are regulated under terms similar to ordinary savings accounts. They are insured by the FDIC (unlike money market funds), and although they may provide checking services, the restrictions of Federal Reserve Regulation D have discouraged their use for day-to-day payment purposes.