Investopedia / Tara Anand
Money market accounts are known as cash market deposit accounts (MMDA).
Higher rates
Check write privileges
Debit cards
Insurance Protection
Limited transactions
Costs
Minimum Balance Requirement
For depositors who need to insure more than $250,000, the easiest way to do this is to open accounts at banks or credit unions.
The lines between high-yield savings accounts and cash market accounts are blurry, and you may need to compare savings and cash market account rates to make sure you choose the right one. more productive product for you.
Don’t confuse a cash market account with a cash market mutual fund. They are two other beasts. While a cash market account is a deposit account, a cash market mutual fund is a mutual fund that invests in highly liquid short-term assets.
Money market accounts at a bank are insured through the Federal Deposit Insurance Corporation, a firm independent of the federal government. The FDIC covers certain types of accounts, including MMAs, up to $250,000 per depositor and per bank. If the depositor has other insurable accounts at the same bank (checking, savings, certificate of deposit), they all count toward the $250,000 insurance limit. For depositors who need to insure more than $250,000, the easiest way to do this is to open accounts at banks or credit unions. Joint accounts are insured for $500,000.
Some of the benefits of MMAs include higher interest rates, insurance protection, check writing, and debit card privileges. The appeal of higher interest rates than savings accounts is one of the main attractions of MMAs. They can offer higher interest rates because they are allowed to invest in certificates of deposit, government securities, and advertising paper, something savings accounts cannot do. Array. These accounts also provide simple access to the budget, as well as the flexibility to move the budget. between accounts of the same institution. And unlike savings accounts, many MMAs offer secure check-writing privileges and also provide a debit card with the account, much like a regular checking account.
The potential drawbacks come with restricted transactions, payouts, withdrawal restrictions, and minimum balance requirements. Banks and credit unions require their customers to deposit a certain amount of cash to open an account and keep their account balance above a certain level. Many will impose a monthly payment if the balance falls below the minimum. Although some MMAs are by offering attractive rates, the maximum will not be able to compete with other higher-yielding alternatives. Banks and credit unions will offer many other types of accounts, some with features that can make them competitive or amazing for cash market accounts. The reserve has replaced withdrawal restrictions, banks can restrict the number of times depositors can withdraw cash from their MMAs.
History of the Federal Reserve. “Garn-St Germain Depository Institutions Act of 1982. “
United States Securities and Exchange Commission. Money market funds.
Federal Deposit Insurance Corporation. “Are my deposit accounts FDIC insured?
Federal Deposit Insurance Corporation. ” Your deposits insured. “
National Credit Union Administration. ” How their accounts are secured through the federal government. “
Federal Deposit Insurance Corporation. ” National price lists and tariff caps”.
Federal Reserve System. ” Regulation D Reserve Requirements,” pages 3-4.
Federal Register. ” Regulation D: Reserves required for deposit-taking institutions”.
Federal Deposit Insurance Corporation. ” Guide for employees of financial institutions on deposit insurance”.