Money market accounts are almost a combination of a checking and savings account. Technically they are named money market deposit accounts (MMDA). A typical advantage of a money market account is that it pays a higher interest rate than a savings account; however, it is usually not significantly higher.
There are some restrictions to a money market account, so if you decide to open one, make sure that understand what these restrictions are.
Usually there is a minimum balance you must maintain. Sometimes it is as high as $500 or even $1000 per month. Typically this is your average closing daily balance over a month. Thus, you can drop below the minimum amount as long as you average the minimum balance over the month.
Also, there is usually a limited amount of transactions that can be done on these accounts over a set period of time. These accounts are regulated and because the account is not considered a transaction account, it is subject to only six withdrawal transactions to third parties are permitted per month, only three of which may be paid by check.
Another good thing about money market accounts is that you can actually write checks from them or even use a debit card in some cases. Remember to watch those transaction limits. If you exceed the transaction limits, a fee is usually charged to you.
There are some restrictions to a money market account, so if you decide to open one, make sure that understand what these restrictions are.
Usually there is a minimum balance you must maintain. Sometimes it is as high as $500 or even $1000 per month. Typically this is your average closing daily balance over a month. Thus, you can drop below the minimum amount as long as you average the minimum balance over the month.
Also, there is usually a limited amount of transactions that can be done on these accounts over a set period of time. These accounts are regulated and because the account is not considered a transaction account, it is subject to only six withdrawal transactions to third parties are permitted per month, only three of which may be paid by check.
Another good thing about money market accounts is that you can actually write checks from them or even use a debit card in some cases. Remember to watch those transaction limits. If you exceed the transaction limits, a fee is usually charged to you.