Find Best Money Market Accounts

Money Market Account Rates

A Money Market Account is a premium account, or a high interest savings account. Money kept in such accounts is invested, but the financial institution has the responsibility of investing and collecting the returns. The money is usually put in investments like Certificates of Deposit (CDs), Treasury Bills, or other secure financial instruments. All these investments are short term and low risk. In return for the investment, the financial institution offers a premium interest rate, which could two times the rate of a normal account. Money kept in a Money Market Account is insured by the FDIC (Federal Deposit Insurance Corporation). This means that even if the issuing credit union or bank goes out of business, your money remains safe. However, a Money Market Account should not be confused with a Money Market Fund. The latter is a strategy of investment with higher returns compared to a premium savings account. Opening and depositing money into a Money Market Account is easy and fast. Investors can open such an account at many different financial institutions. Since these accounts are opened for long time periods, they are ideal for investing periodic funds like school tuition fees or emergency funds.

Despite being a good, low risk investment, a Money Market Account has several restrictions. You will not be able to access your money as easily as you would for an ordinary savings account. There is a limit to the amount of money you can withdraw every month. In addition, such accounts require a minimum deposit as well as a minimum balance. If you go below the expected minimum balance, there is a penalty. The rate of interest for Money Market Accounts is determined by the investor’s level of assets deposited, not to maturity as in the case of certificates of deposit. Therefore, money markets tend to unfairly favor wealthier investors.