Money market account
What is a money market account?
A money market account is an interest-bearing bank account than offers a higher interest rate than a regular savings account because it’s tied to interest rates in money markets. They’re a pretty safe, low-return investment for the average person establishing a savings.
Money market accounts often function like a blend between traditional checking and savings accounts, offering the account holder regular access to funds along with limited check-writing ability. However, to make up for their higher interest rates, most money market accounts have minimum balance requirements, with some institutions requiring a minimum account as low as $100 and others mandating initial deposits as high as $10,000.
Many money market accounts come with added features like debit cards and personal checks, but there are limits to their use as spelled out by the Federal Reserve‘s Regulation D. Similar to a savings account, money market account holders can only make an online transfer or pay using a check or debit card six times per month, with exceptions for ATM withdrawals in cash.
Compare the best rates among savings accounts and money market accounts with Bankrate’s comparison tool.
Money market account example
Tila decides she has a lot of money that’s just sitting in her checking account. When looking at her savings account options, she notes that the best rate is in a money market account. It has a minimum balance requirement of $1,000, so she moves that amount over.