What do money market accounts pay?

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asked Dec 25, 2021 in Investing by Wolfoo (2,040 points)
What do money market accounts pay?

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answered Dec 25, 2021 by Vapirusky (36,280 points)
Money Market accounts typically pay an interest rate of around 0.7 percent.

Money market accounts pay a variable interest rate, allowing you to earn a return on your money.

It's common for these accounts to have tiered rates, meaning higher balances are rewarded with a higher annual percentage yield (APY).

Money market accounts tend to offer higher yields than typical savings accounts.

A money market account is an interest-bearing account at a bank or credit union—not to be confused with a money market mutual fund.

Most money market accounts pay a higher interest rate than regular passbook savings accounts and often include check writing and debit card privileges.

Money market investing can be very advantageous, especially if you need a short-term, relatively safe place to park cash.

Some disadvantages are low returns, a loss of purchasing power, and that some money market investments are not FDIC insured.

Both money market accounts and money market funds are relatively safe.

Banks use money from MMAs to invest in stable, short-term, low-risk securities that are very liquid.

Money market funds invest in relatively safe vehicles that mature in a short period of time, usually within 13 months.

Money market accounts often have higher minimum deposit or balance requirements than regular savings accounts—but offer higher returns, more on a par with money market funds.

The interest rates an account offers might vary, depending on the amount of money within it.

Six to 12 months of living expenses are typically recommended for the amount of money that should be kept in cash in these types of accounts for unforeseen emergencies and life events.

Beyond that, the money is essentially sitting and losing its value.

A money market account is basically a savings account—with some checking account features.

That means you can sock cash away and earn a great interest rate, but you also get check-writing and debit card access.

And you can add money to the account whenever you like, unlike with certificates of deposit (CDs.)

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