A money market account can be a good place to park funds that you may need access to quickly, and that keep your money relatively safe no matter what happens in the stock market or the economy. So, how does a money market account work?
These financial vehicles are generally available at banks and other institutions. The yield on a money market account is usually more than that of a regular savings account. (Although it may be a bit lower than the yield on a CD or fixed annuity).
In return for this higher rate, you may be required to maintain a minimum balance in a money market account. You may also have to follow other rules, too, such as writing only a certain number of checks per month and/or limiting the amount that you withdraw from the account.
Bank money market accounts are insured by the FDIC (Federal Deposit Insurance Corporation) up to the set limit. So, even if the bank goes under, your funds in this type of account wont completely disappear.
If you have savings goals, such as accumulating a down payment for a house, a money market account can be a good place to park these funds. Likewise, these financial vehicles are a good option for keeping your emergency fund.
