What Is A Money Market Account And Is It Right For You?

Saving money is an excellent habit, using this money to pay bills, use for emergencies, large purchases, and to make investments.

Money market accounts contain securities, including Treasury bills, certificates of deposit (CDs), and commercial paper (CP).

A money market account (MMA), sometimes called a money market deposit account (MMDA),  is a particular interest-bearing account that pays relatively high-interest rates.

MMAs are not marketable securities though they contain money market securities. Traditional banks, online banks, and credit unions are depository institutions that offer these accounts.

Although they sound similar and cause some confusion, money market accounts and mutual funds have notable differences in insurance coverage, returns, and risk.

Both have initial minimums, but MMMFs don’t have the withdrawal restrictions of the MMAs.

When you open a brokerage account or have a mutual fund, safety comes from SIPC if the brokerage firm fails to $500,000 per customer per separate capacity account.

The respective bank or credit union sets the interest rate and therefore is a guarantee for the MMA, whereas the money market mutual funds’ performance is its returns.

Benefits of Money Market Accounts 1. Designed For Saving Money 2. Safe Place To Keep Your Money 3. Flexibility Having An MMA At Your Bank

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