money market account
A type of bank or credit union account offering higher interest rates than regular savings accounts while maintaining FDIC insurance and limited check-writing privileges.
Example
“Her money market account paid 4.8% APY while remaining fully liquid and FDIC insured.”
Memory Tip
MONEY MARKET account = higher-yield savings with FDIC protection. Best for emergency funds.
Why It Matters
Money market accounts help you earn significantly more interest on your savings compared to regular savings accounts while still keeping your money safe through FDIC insurance. This makes them valuable for building emergency funds or parking cash you do not need immediately, as you can earn meaningful returns without taking on investment risk.
Common Misconception
Many people confuse money market accounts with money market funds, but they are quite different. Money market accounts are bank products with FDIC protection, while money market funds are investments that are not federally insured and can fluctuate in value.
In Practice
If you deposit 10,000 dollars in a money market account offering 4.5 percent annual interest, you would earn approximately 450 dollars in interest over one year, compared to earning only 20 dollars in a regular savings account at 0.2 percent. You can write a few checks per month from this account and access your money easily while your balance grows.
Etymology
MONEY MARKET (short-term credit market) ACCOUNT. An account that invests in the MONEY MARKET.
Common Misspellings
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