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.

A money market account (MMA) is a savings account that may also have debit card and check-writing privileges. The accounts typically limit the number of purchases and transfers to six each month. ATM withdrawals usually are not capped.

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.

Checking accounts typically place no limit on the number of transactions you can make in a single statement period. With a money market account, however, you're typically limited to six withdrawals and transfers per statement, though some transactions, such as in-person withdrawals, don't count toward this limit.

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.

Money market accounts are a type of deposit account that earns interest. Rates are often higher than traditional savings accounts. Money market accounts typically limit your withdrawals per month and have a higher minimum balance requirement than traditional savings accounts.

Many accounts have monthly fees

Another drawback to remember is that while they have high yields, money market accounts can also come with cumbersome fees. Many banks and credit unions will impose monthly fees just for the upkeep of your account.

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.

The biggest risk a money market account poses is that your money may lose value over time to inflation. Depending on inflation and the interest rate you earn with your money market account, inflation may outpace your MMA's earnings.

Can a money market account lose money? ›

Since money market accounts are insured by the FDIC or the NCUA, you cannot lose the money you contribute to the account—even in the event of a bank failure. You can, however, be subject to fees and penalties that reduce your earnings.

How Do Money Market Accounts Work? Money market accounts work like other deposit accounts, such as savings accounts. As customers deposit funds in a money market account, they earn interest on those funds. Typically, interest on money market accounts is compounded daily and paid monthly.

Advantages of Money Market Accounts

Federal regulations that govern savings account withdrawals don't apply to ATMs. So you can make unlimited ATM withdrawals from your money market account without penalty. Many banks also let you to write a limited number of checks from your money market account.

Some disadvantages are low returns, a loss of purchasing power, and the lack of FDIC insurance.

Money market accounts work like a blend of a savings and a checking account. They come with the potential to earn higher interest rates, but may also let you write checks. Luckily, these accounts are FDIC-insured, which keeps your money safe in the event of a bank failure.

Yes, money market accounts are safe. The FDIC insured these products for up to $250,000 per depositor, per account ownership category. At credit unions, money market accounts receive the same level of protection from the NCUA.

“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.

A money market account is neither a checking nor a savings account but has certain characteristics similar to both. Like regular checking accounts, money market accounts allow account holders to make withdrawals and transfers, and write checks.

A money market account (MMA) is a type of savings account that typically pays a higher rate than a standard savings account or checking account. Many people consider money market accounts to be “hybrid” accounts that combine checking and savings features.

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. Not FDIC insured, but considered safe because they are government securities.