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Money Market Accounts

Money market accounts fall under the category of savings accounts.  The money market accounts are usually offered by banks with competitively high interest rates.  The restrictions to obtaining one of these accounts are generally far more difficult than the average checking over savings accounts.

Some restrictions placed on money market accounts include:

• Relatively high minimum balance requirements
• Restriction of withdrawals from the account to an average of three to six per month
• Limits on the number of third party transactions or checks to be issued monthly
• Required minimum balance maintenance of the money market account

Because money market accounts are seen typically as savings accounts, the Federal Deposit Insurance Corporation, or FDIC, insures your money will remain in the account in the event of bank bankruptcy or closure.  For credit union banking, the National Credit Union Administration, or NCUA, insures an individual’s funds.  The reason banks are so willing to offer a much higher interest rate on money market accounts stems from the inactivity or length in ownership of the money the banks may control.  The restrictions on withdrawals and minimum balances simply insure banks a longer time to invest and use the money the consumer has loaned them.  The interest a bank will pay a consumer for investing their money in the institution is usually paid monthly and compounds daily.  With patience and diligent investments, one can use money market accounts as a viable prospect of financial gain now and in the future.  

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