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Money market account

A money market account is a type of savings account with relatively high interest rates.

Expanded Definition

A money market account is a high-interest, government-protected savings account typically offered by banks and credit unions. Although other companies may offer money market accounts, only those in banks and credit unions are insured.

Money market accounts typically have a minimum balance requirement, and many earn higher rates of interest for larger deposits. For example, an account holder may earn 1% for a $10,000 deposit, but 3% for a $50,000 balance. They also restrict the number of transfers or withdrawals allowed a month to six, and only three may be checks written against the account.

Money market accounts are different from money market funds, which are a kind of mutual fund.

Money market accounts are ideal places to hold medium-term savings and emergency money, because they combine the liquidity of a passbook account with interest rates that approach those earned by certificates of deposit.

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