Money Market Accounts, or MMAs, are a type of savings account that pay a higher rate of interest than you typically earn on a standard savings account. Because they are highly liquid, money market accounts are a good choice for the cash portion of savings.
There are a few things to be aware of before you open a money market account.
- You will have to keep a higher minimum balance than you would on a standard savings account.
- You will be restricted to a maximum number of withdrawals per month. Typically, you’ll only be allowed to withdraw 6 times each month.
These restrictions aren’t too extreme and you can easily manage them with a little forethought.
Where Can I Open One?
You can open a money market account at most banks. If you have a checking account, chances are you can open a money market account at the same bank.
Are Money Market Accounts FDIC Insured?
Money market accounts are insured by the FDIC. This means that your account is protected up to the FDIC insurance limit. For 2019, that limit is $250,000 per depositor, per insured bank, for each account ownership category. This is the same FDIC insurance and limit that applies to your regular savings account or CDs.
Can You Lose Your Money in a Money Market Account?
Suppose the bank where you hold your MMA fails. Given the FDIC insurance mentioned above, you’d be made whole as long as you were under the $250,000 limit.
Contrast that with money market mutual funds, which are not FDIC insured.