Money Market Account

AAA

DEFINITION of 'Money Market Account'

An interest-bearing account that typically pays a higher interest rate than a savings account, and which provides the account holder with limited check-writing ability. A money market account thus offers the account holder benefits typical of both savings and checking accounts. This type of account is likely to require a higher balance than a savings account, and is FDIC insured.

INVESTOPEDIA EXPLAINS 'Money Market Account'

Money market accounts are widely available, and are offered by banks and other financial institutions. They are able to offer a higher interest rate by requiring a higher minimum balance, and by placing restrictions on the number of withdrawals the account holder may take over a given period of time. This restriction makes them less liquid than a checking account, but more liquid than bonds.

Similar to the interest earned on checking and savings accounts, the interest earned on a money market account is taxable. Account holders do not have to buy shares in a money market account, as interest earned on deposits is similar to interest earned on checking and savings accounts.

Banks issuing money market accounts take a low-risk approach when investing deposits, investing in certificates of deposit, government securities, and commercial paper.

Investors looking to purchase shares in a savings-like account can do so through a money market mutual fund, which typically has a share price of $1. 

VIDEO

RELATED TERMS
  1. Money Market Fund

    An investment fund that holds the objective to earn interest ...
  2. Retirement Money Market Account

    A money market account that an individual holds within a retirement ...
  3. Call Deposit Account

    A bank account for investment funds that offers the advantages ...
  4. Discovery Value Accounting

    A method of accounting often used in the oil and gas, mining ...
  5. Money Market Account Extra - MMAX

    An account structure that provides depositors with the ability ...
  6. IDC Deposits

    IDC Deposits Corp. oversees the MMAX (Money Market Account Extra) ...
Related Articles
  1. Choosing Between Dollar-Cost And Value ...
    Investing Basics

    Choosing Between Dollar-Cost And Value ...

  2. Money Market Mutual Funds: A Better ...
    Mutual Funds & ETFs

    Money Market Mutual Funds: A Better ...

  3. Introduction To Money Market Mutual ...
    Mutual Funds & ETFs

    Introduction To Money Market Mutual ...

  4. Getting To Know The Money Market
    Options & Futures

    Getting To Know The Money Market

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center