If you don't know what a money market account is, chances are, you've heard the term but may not know what it means. If the money is flowing a little more freely than it has been in recent years, you may be in the market for a money market account and not even know it.
What is it?
A money market account can refer to money market funds -- the type that brokerages offer -- but if you're just starting to get your financial house in order, a money market savings account is probably what you want. They can be found at any bank or credit union and are glorified savings accounts, but with some substantial differences. You're only allowed a handful of withdrawals every month (usually three to six), and there's a higher balance requirement (expect $1,000 to $2,500).
But the upshot of having this type of savings account is that it usually pays a higher interest.
Who is it for?
A money market account is for anyone who wants to save money. If you're having trouble keeping money in a checking account, you may want to pass on this until your financial situation is a little more stable. But if you're starting to sock some serious money away and don't expect to have to withdraw this cash, or at least not often, then there's something to be said for getting a higher interest rate. Unlike a money market fund, your money market savings account is FDIC-insured. (That said, while a money market fund isn't FDIC-insured, it usually is a safe investment.)
In other words, this is perfect for new investors who want to start saving some serious money -- and yet be able to access it without any trouble if problems happen to arise. It's also a favorite spot for established investors who want to keep their money somewhere it can grow while they take some time researching where they want to invest it later.
If you're unsure where to find an MMA, or money market account, check out Bankrate.com's MMA search engine.
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