Understanding Money Market Accounts

Posted on August 23 2009

A money market account is a type of savings account offered by banks and credit unions just like regular savings accounts. The benefit is that they usually pay a higher interest rate.  A drawback for many is that they have higher minimum balance requirements (sometimes $1000-$2500) and only allow three to six withdrawals per month. Unlike a standard savings account, many money market accounts will also let you write up to three checks each month, similar to a checking account.

With bank accounts, the funds in a money market account are insured by the Federal Deposit Insurance Corporation (FDIC), which means that even if the bank goes out of business, your money will still be there. With credit unions, the funds in a money market account are insured by the National Credit Union Administration (NCUA), a federal agency.

If you have an interest in exploring whether a money market account would be a benefit to you, contact your local bank and they will be able to give you comparisons.