Money Market Account Definition

Anytime you are examining money market accounts you will notice the entry for the APY. This is a definition for the annual rate of return and is stated as the Annual Percentage Yield. This is the base definition for your interest bearing deposits that you keep and preserve in your account. For any investors this is going to be the main number of interest. All money market accounts will normally pay a higher APY when compared to a normal savings account. The APY rate of return can rise and fall as changes are made by the Federal Reserve or with special offerings from your bank or credit union.

Your money market accounts will be regulated and require a minimum balance. This minimum balance will vary between institutions at any given time. There are banks that make offers of zero balance needed, while others will want $1000 to be deposited or more. If you are creating new money market accounts the minimum balance requirements will influence your decisions on which banks to do business with. With any money market account each individual has to decide their willingness to deposit large sums of money. Your deposits will need to remain in the account over a period of time before all return values are realized.

Your personal use of the capital deposit and money market accounts will have set limits on its use. Withdrawals and writing checks against the capital amount will all be determined in your marketing program with the lending institution. On average most banks will limit your check withdrawals from 3 to 6 times each month or every quarter. If you exceed your check writing quota there were likely be an added charge applied by the bank to cover this withdrawal.

Some banks or credit unions will apply special membership fees or monthly charges to oversee your money market accounts. These added fees will again vary between institutions that do offer some perks for their extra cost. All money market accounts will normally provide a monthly statement of your accounts activity and have an Internet access window which will show daily changes and account balances. Some banks will offer a special bank card for use at ATM machines so you can check or apply changes to your accounts from many different locations.

Money market accounts are considered much safer than accounts that hold stocks or bonds. Many banks will make use of lending your capital to other banks or borrowing institutions. This process of circulating a live cash capital between banks gives them the power to back up larger loans as well as short-term investments to small businesses. You might not know where your savings are at any given time but the banks will and you will always be protected and insured by the FDIC.