MONEY MARKET ACCOUNTS DEFINED
Money market accounts are liquid investment vehicles that are usually used by people to store money. The highest money market interest rates are usually similar to a bank saving account but lower than a bank CD.
The interest rate you get on any type of savings vehicle is usually dependent on the length of time you are willing to give up the money. The bank makes money by taking your money and turning around and loaning it back out at a higher rate than they give you. The longer they know they have your money, the more they can do with it and the more they are able to give you in interest in return.
With a money market account, you can take it all out at any time. Additionally, most moeny market accounts will allow you to write a few checks a month. Because you always have access to your money, the bank or brokerage has to put the money in short terms investments which pay less. Therefore they have less to pay you which is why the best money market interest rates are lower than than of a fixed terms CD or government bond.
