What are money market accounts?

Do you ever wonder why your money grows in banks?  Well it works in a simple way. Whether you are dealing with certificate of deposit or savings account it is always a trend that the longer you allow your money to stay in the bank the higher would be the interest your fund will earn. This is because the money you are keeping in the bank is being utilized for instance being lent to other people which in turn will grow interest for the bank’s benefit. The more you let your money to be used in the bank the more you grow your own interest. However this does not mean that since the bank is using your money it will not be available when you decide to withdraw them.

The same pattern is happening with money market saving account. This savings account is quite similar with few differences with the regular savings account offered by banks and other financial institutions. Among the difference includes a requirement for higher minimum balance for it will also generate higher interest rate compared to other savings account. Consumers are also allowed to withdraw funds sic times maximum in a term.

Another feature of money market account is that all the concerned deposited money is insured by the Federal Deposit Insurance Company (FDIC). This is an assurance for account holder that even if the bank they trusted collapsed they can still recover their money through FDIC. In 1920s several banks collapsed leaving depositors with nothing and this incident has been the reason why in 1993 FDIC was created. Another federal agency, National Credit Union Administration (NCUA) is responsible in insuring money market accounts in credit unions.      

Interests offered with money market accounts are higher than the regular savings account. There is also less restriction to the access to the fund unlike the certificate of deposit where consumers must wait for the maturation of fund before they can access it without being fined.

Money market account is just another way on how people can keep their money safe in banks with lesser risk given that the funds are secured. And just like other types of savings accounts shopping around is the best way to get hold of the best offer available in the market. Jumping into the first offer that is encountered will defeat the purpose of comparison shopping thus it is not an ideal thing to do.