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What is a money market 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. Traditionally, money market accounts often offered higher interest rates compared with regular savings accounts. But these days, rates are similar. However, many MMAs have higher minimum deposit or balance requirements than regular savings accounts. Deposits are insured by the Federal Deposit Insurance Corp. at banks and the National Credit Union Administration at credit unions. Your money is protected, up to $250,000 per depositor, if the financial institution goes out of business. What are the pros and cons of money market accounts?Is a money market account worth it? That depends. If you’re considering one, keep these pros and cons in mind. Pros
Cons
When to choose a money market account over a savings accountIf your bank pays better or the same rate on its standard savings account as a money market account, and your goal is to park your funds and watch your bank balance grow, it might be worth sticking with the savings account. But if the money market’s rate is higher than the savings account, or you need to make an occasional purchase from the account, and you can meet any minimum balance requirement, it could be a good idea to open a money market account. Compare money market accountsUFB High Rate Money Market
Discover Bank Money Market Account How to choose a money market accountLook for a money market account with a high interest rate and no monthly fee. The account should also have a low minimum balance — less than $1,000 is often attainable. Some institutions require $10,000 or more to earn the best rates or avoid a fee, while others have no minimum. Money market accounts vs. other accountsMoney market accounts have features that overlap with those of other bank accounts, but there are important differences. Consider how they compare with other savings accounts:
Money market accounts also have crucial differences from other types of bank accounts:
» Want to learn more about investing in the stock market? Check out our guide for beginners. Can you lose money in a money market fund?Because money market funds are investments and not savings accounts, there's no guarantee on earnings and there's even the possibility you might lose money. When interest rates are low, money market rates are also low, earning investors very little.
Is your money at risk in a money market account?Are money market accounts safe? Money market accounts are safe if they are with federally insured banks or credit unions. Just make sure your financial institution is a member of the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union Administration (NCUA).
What is the downside of a money market account?Money market investing can be very advantageous, especially if you need a short-term, relatively safe place to park cash. Some disadvantages are low returns, a loss of purchasing power, and that some money market investments are not FDIC insured.
Is a money market account a good idea?If you want to earn a higher APY and you can meet a higher account minimum, a money market account is a good choice. It's also a smart option for people who need easy access to their money. If you know that you won't need the money for a while, and you want to earn an even higher APY, a CD works well.
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