MONEY MARKET
Back to GlossaryDefinition
An interest-bearing account at a bank or credit union.
Summary
A money market account is a special type of savings account offered by banks and credit unions that typically pays higher interest rates than regular savings accounts. These accounts combine features of savings and checking accounts, often allowing limited check-writing privileges while requiring higher minimum balances. Money market accounts are FDIC-insured and considered low-risk investments, making them popular for emergency funds or short-term savings goals.
Usage Context
Understanding money market accounts is important when learning about different types of bank accounts, comparing savings options, discussing interest-earning vehicles, and making decisions about where to keep emergency funds or short-term savings.
Common Confusions
- Confusing money market accounts with money market mutual funds (which are investment products, not bank accounts)
- Thinking money market accounts have no withdrawal limits (they typically limit transactions to 6 per month)
- Assuming all money market accounts offer the same interest rates
- Believing money market accounts are the same as checking accounts
