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Dear Dr. Don,
I'm very new at all of this and I've been trying to research the differences between all the options for investing and saving. Unfortunately, I still don't understand the differences between a money market account and a high-yield savings account. Can you help me?
-- Billie Banking
Dear Billie,
A money market account, or MMA, has limits on the number of checks or withdrawals you can make on the account in a month.
That means it's not a good substitute for a checking account.
Bankrate's glossary defines it as:
A money market account is an FDIC-insured deposit account that allows you access to the money you have deposited. Withdrawals are limited to six monthly, three of which may be by check. It's sometimes called a money market deposit account to distinguish it from a money market fund, which is a type of mutual fund.
A high-yield savings account differs
from a money market account because, as a savings
account, it doesn't have check-writing features.
Withdrawals are often limited and there is often
a minimum balance requirement.
Bankrate's high yield money market
and savings account rate calculator
allows you to compare the two and lets the investor
decide whether or not they need check-writing
privileges when shopping for an account.
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