Explanation of Money Market Accounts

A money market account is a savings tool.

A money market account is intended to help you save money and earn interest at higher rates than a regular savings or checking account. But before you open your account, become familiar with how a money market account works.

Limitations

There is a limit of six transactions per month on a money market account. This includes withdrawals and transfers, although some electronic transactions are excluded from the limit.

Interest

Interest rates on money market accounts are generally set up in "tiers" -- that is, the more money you keep in the account, the more interest you will earn.

Fees

Some banks charge fees if your money market account drops below a certain monthly limit, such as $1,000 or $2,500. Also, if you exceed your six monthly transactions, the bank will most likely charge a fee.

Other Uses

Your money market account can sometimes be used as overdraft protection on your checking account. In addition, you can write three checks per month from a money market account, although these checks do count toward your monthly transaction limit.

References

• Bankrate.com: Money Market Fund Investing
• Bankrate.com: Money Market Accounts Reward Thrift

Resources

• The Board of Governors of the Federal Reserve System