A money market account is an option to deposit your extra savings that can give you a higher return for your money than a traditional savings account.
How does a money market account work?
Money market accounts let you access your money at any time, but they will usually have restrictions on how often you can access your account (for example, up to three times a month).
Money market accounts can also require you to keep a certain minimum balance to avoid extra fees.
Knowing that customers’ deposits in money market accounts are going to be fairly stable gives banks and financial institutions a better ability to turn around and invest these money market funds in short-term fixed-income financial vehicles (also known as “money market instruments,” hence the name of the account).
This extra investment ability of these banks pays off in the form of higher returns on their investment, which the bank may pass along to you, the customer.