Money Market Account
Definition
A savings account hybrid offering higher interest than regular savings but lower than CDs. Interest rates fluctuate. Often comes with a checkbook and debit card. FDIC insured up to $250k, making it very safe.
Why It Matters
Money market accounts bridge savings accounts and CDs. Better rates than savings but more liquid than CDs (you can withdraw anytime). Good for emergency funds where you want higher rates than regular savings.
Example
Regular savings: 0.01% APY ($1 on $100k annually). Money market account: 4.5% APY ($4,500 on $100k). CD: 5% APY ($5,000) but locked for 12 months. Money market gives you nearly as much with full flexibility.