What Is Money Market Account & Its Benefits

Money market account is a type of savings account offered by banks and credit unions that typically offers higher interest rates than traditional savings accounts. It may require a higher minimum deposit to open and maintain but in return, it often offers more flexibility in terms of account access including the ability to write checks and make a limited number of withdrawals or transfers each month. Money market accounts are typically considered to be low risk investments and they are generally insured by the FDIC or NCUA up to a certain amount.

Money Market Accounts Are FDIC Insured

Most money market accounts are FDIC insured up to $250,000 per depositor per insured bank or savings association. It is important to note that not all types of financial products offered by banks such as investments or annuities are insured by the FDIC, so it’s important to check whether a specific account or investment is FDIC insured.

Write Checks From Money Market Account

Most money market accounts allow you to write checks or make electronic transfers although there may be some restrictions on the number of transactions you can make per statement period typically six transactions. Money market accounts are designed to be more flexible than traditional savings accounts, they often offer more options for accessing your money such as writing checks or using a debit card. However, they may also require a higher minimum balance and may have other fees or restrictions, so it’s important to review the terms and conditions of the account before opening it.

Minimum Balance Required To Avoid Fees

The minimum balance required to avoid fees varies depending on the bank or credit union and the specific money market Account you have. Generally, money market accounts require a higher minimum balance to open and maintain than traditional savings accounts and this minimum balance may be higher in order to avoid fees. Some banks or credit unions may require a minimum balance of $1,000 or more to avoid monthly fees while others may have lower minimum balance requirements. It’s important to review the account terms and conditions carefully to determine the minimum balance required to avoid fees for your specific money market account.

Interest Rates For Money Market Account

The interest rate for a money market account varies depending on the bank or credit union offering the account as well as market conditions and other factors. Money market accounts offer higher interest rates than traditional savings accounts but lower interest rates than some other types of investments such as certificates of deposit or mutual funds. The interest rate for a Money Market Account may be a fixed rate or a variable rate and it may be tiered based on the account balance. It’s important to compare the interest rates and fees for different money market accounts before choosing one as they can vary significantly and affect the overall return on your investment.

Access To The Funds In Money Market Account

You can typically access the funds in your money market account in several ways including:

In person: You can also access the funds in your money market account by visiting a branch of the bank or credit union and making a withdrawal or transfer.

Debit card: Some money market accounts come with a debit card which you can use to make purchases or withdraw cash from ATMs.

Writing checks: Many money market accounts allow you to write checks which you can use to pay bills or make purchases.

Online banking: Most banks and credit unions offer online banking services that allow you to transfer funds view account balances and pay bills.

It’s important to note that most money market accounts have limits on the number of transactions you can make per statement period typically six transactions due to federal regulations. If you exceed this limit, you may be charged a fee or your account may be converted to a non interest bearing account.

Fees Associated With Money Market Account

There may be fees associated with a money market account although these vary depending on the bank or credit union offering the account and the specific terms and conditions of the account. Some common fees associated with money market accounts include:

ATM fees: If you use an out of network ATM to withdraw funds from your money market account, you may be charged a fee by both your bank or credit union and the ATM provider.

Minimum balance fees: Some banks or credit unions require a minimum balance to open and maintain a money market account and if you fall below this balance, you may be charged a fee.

Excess transaction fees: Federal regulations limit the number of transactions you can make per statement period for money market accounts typically six transactions and if you exceed this limit you may be charged a fee.

Monthly maintenance fees: Some banks or credit unions charge a monthly fee for maintaining a money market account although this fee may be waived if you maintain a minimum balance or meet other requirements.

It’s important to review the terms and conditions of the account carefully to understand the fees associated with the account and how to avoid them.

Difference Between Money Market Account & Savings Account

Money market accounts and savings accounts are both types of deposit accounts offered by banks and credit unions but they have some key differences. Here are a few ways in which a money market account differs from a savings account:

Fees: Money market accounts may have higher fees than savings accounts although these can vary depending on the bank or credit union offering the account and the specific terms and conditions of the account.

Interest rates: Money market accounts typically offer higher interest rates than savings accounts although the difference may be small.

FDIC insurance: Both money market accounts and savings accounts are typically FDIC insured up to $250,000 per depositor per insured bank or savings association.

Account access: Money market accounts typically offer more flexibility in terms of account access than savings accounts such as the ability to write checks and make electronic transfers.

Minimum balance: Money market accounts often require a higher minimum balance to open and maintain than savings accounts although the minimum balance requirement may vary by bank or credit union.

Money market accounts may be a good choice for savers who want a higher interest rate and more flexible account access but are willing to maintain a higher minimum balance and pay higher fees. Savings accounts may be a better choice for savers who want a simple and low cost account with a lower or no minimum balance requirement.

Minimum Deposit Requirement To Open Money Market Account

The minimum deposit required to open a money market account varies depending on the bank or credit union offering the account. Some institutions may require a minimum deposit of $1,000 or more to open a money market account while others may have lower minimum deposit requirements.

It’s important to review the account terms and conditions carefully to determine the minimum deposit required to open a money market account with your chosen bank or credit union. Keep in mind that while a higher minimum deposit may be required to open a money market account which may also result in a higher interest rate and other benefits such as waived fees.

Monthly Withdrawals In Money Market Account

Federal regulations limit the number of certain types of withdrawals and transfers that you can make from a money market account to six per statement period. These types of transactions include:

Overdraft transfers.
Check or debit card transactions.
Transfers to another account at the same bank or credit union.
Electronic transfers including online and mobile banking transfers.

If you exceed the six transaction limit, your bank or credit union may charge you a fee or convert your money market account to a non interest bearing account. This limit applies only to certain types of transactions and you can make an unlimited number of withdrawals or transfers in person at a branch or ATM. It’s also worth checking with your bank or credit union to see if they have any additional restrictions or fees on transactions made from a money market account.

Conclusion

Money market account is a type of savings account offered by banks and credit unions that typically offers higher interest rates than traditional savings accounts. They may also offer greater account access and flexibility including the ability to write checks, make electronic transfers and ATM card usage. Money market account may be a good choice for savers who want a balance of high interest rates and account access but are willing to maintain a higher minimum balance and pay higher fees.