Money Market Account
What is a ‘Money Market Account’
A money market account is an interest-bearing account that typically pays a higher interest rate than a savings account, and which provides the account holder with limited check-writing ability. A money market account thus offers the account holder benefits typical of both savings and checking accounts. This type of account is likely to require a higher balance than a savings account and is Federal Deposit Insurance Corporation (FDIC) insured.
BREAKING DOWN ‘Money Market Account’
Money Market Account Fees and Minimums
Money market fund minimums to establish an account generally vary among financial institutions. Online banks such as State Farm Bank offer money market options that require an initial deposit of $100 whereas banks such as Silvergate Bank mandate that a deposit of $10,000 to open an account. Regional retail banks such as PNC Bank only mandate a $1 deposit to establish an account.
State Farm Bank’s money market account requires a minimum balance of $500 to avoid a $10 monthly service fee. Silvergate Bank, by contrast, requires a $50,000 balance to sidestep monthly fees of $50 per month. Both institutions offer check writing privileges on these accounts.
Money Market Rates
Eschewing brick-and-mortar options for an electronic market presence, online banks are able to offer higher rates through reduced operational costs. PNC Bank, with walk-in locations extending from the South to Northeast and into the Midwest, offers a money market rate of 0.13% on balances between $50,000 and $99,000 in the Northeast as of July 7, 2016. Online banks such as Ally Bank, headquartered in Midvale, Utah and possessing no retail branches, establishes a money market rate of 0.85% across all balances. The national average for a bank money market account has an annual percentage yield of 0.11%.