What Is a Money Market Account?

Are You Saving Up For Something Big Or Looking To Earn Extra Interest On Your Funds? Consider Opening A Money Market Account. These hybrid savings/checking accounts allow for higher earnings potential while still allowing up to six withdrawals per statement cycle – perfect if your savings goals include making purchases!

Credit unions may also provide check-writing privileges and debit card services similar to a checking account, with competitive interest rates. They’re usually insured by either the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Shared Insurance Fund (NCUSIF), just like regular banks do.

Money market accounts (MMAs), unlike traditional savings accounts which may limit access to your funds, typically allow for greater flexibility when it comes to accessing them. They usually allow checks and ATM withdrawals within certain limits – making them suitable for people looking for easy access or needing emergency access to savings funds. As with any financial decision, be sure to compare fees and minimum balance requirements prior to opening one as this could significantly diminish earning potential.

Money market accounts offer an extra level of protection. Many are FDIC-insured, meaning your funds could be protected up to $250,000 should the bank go under. To qualify for FDIC insurance, banks must hold your money as debt securities – effectively an interest-bearing loan – instead of lending out straight money.

Certain banks require large deposits in order to open money market accounts, while many don’t require minimum deposit requirements at all. Synchrony offers various money market accounts with low minimum deposits requirements and depending on the bank, you should consider whether or not its financial institution is part of the FDIC and how much of your deposits may be protected in case of failure.

Money market accounts are excellent choices for those seeking long-term savings or higher rates of return than would be available from traditional savings accounts, but may not be suitable for short-term goals like saving an emergency fund or specific expenses that you know will arise soon. Instead, an IRA or 529 plan may offer better tax benefits. This article will help explain the differences between money market accounts and their alternatives so that you can decide which is right for you.