What's a Money Market Account?
As with savings accounts, money market accounts pay interest on your deposits. Additionally, these accounts often have tiered rates, with higher balances earning higher rates. They also allow you to write a limited number of checks each month, although money market accounts are still subject to the same withdrawal limitations as regular savings accounts.
The main features of a money market account include:
- interest, helping your savings grow (once you pass a minimum balance threshold)
- liquidity, letting you easily access your money
- federal insurance, meaning you’ll never lose money you deposit*
- automatic deposits, making the process of saving that much easier
Unique Features of Money Markets
Money market accounts uniquely offer:
- higher rates. You can earn dividends that pay more than the interest in a standard savings account, so long as you meet any minimum balance requirements. In many cases, the more you save, the more you earn!
- easier access to funds. Many money market accounts come with a checkbook to provide easy access to your funds as needed. Some money market accounts can also be accessed via an ATM or debit card, similar to a checking account.
When to Use a Money Market Account
Money market and standard savings accounts have a lot in common, but there are times when you might prefer to use a money market account:
- if you’ve accumulated enough cash to benefit from the dividends available with higher balances
- to save for a particular project that might require occasional check writing (such as a home renovation)
*NCUA/FDIC insurance is up to $250,000 per account ownership category.
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