If you are conservative and don't think of yourself as a risk taker when it comes to your money. However, you are interested in exploring all your options for deposit accounts then this information on what a money market deposit account does can be helpful.
Money market deposit accounts are a type of deposit or savings account in the United States. Many money market accounts also allow checks to be written on the account, thus making it act like a transaction account. However, regulation Q of the Federal law prevents conventional checking accounts for earning interest, so the structure is slightly different so to be in compliance with the regulation. Typically deposits into transactional money market deposit accounts have extremely high minimum deposit amounts.
Since money market deposit accounts are not conventional or legal transaction accounts, banks are legally required to discourage customers from exceeding their monthly transaction limits. In general, only six withdrawal transactions are allowed to third parties monthly, and only half of those can be checks. Banks charge high fees to those who exceed those limits and if there are continual violations of the money market deposit account policies, consumers may find their money market accounts closed.
The Federal Deposit Insurance Corporation or FDIC covers many types of deposit accounts including money market deposit accounts. Individuals have their money market deposit account investments insured up to $250,000 per bank.
Because of the structure of money market deposit accounts they are a great way for those to store money that can be used for future investments. For example, if you were to sell your home and planned on renting for a brief period of time until you found the next property to buy, a money market deposit account would be a safe place to store and save your money. $250,000 will be covered by insurance and if you needed to access your money to write a check for your next home's down payment, you can have quick access to it.
