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What are money market accounts?

Money market accounts are a form of savings account that can also be seen as an investment product. They allow private investors to trade on the money markets through their banks, without having to become part of a money market fund.

Money market accounts are offered primarily by banks. They usually have a very high minimum deposit value. In the UK this is currently in the region of £25,000. While accounts of this type tend to require substantial funds to set up, they can potentially yield lucrative rewards. A defining feature of money market accounts is that they generally have higher interest rates than straightforward deposit accounts.

In order to comply with various banking laws there are often a number of restrictions applied to accounts of this kind. Depositors can be limited in the number of withdrawals they can make to third parties per month, and on the number of cheques they can write. In some cases only a certain number of monthly transactions of any kind may be permitted.

Money market accounts are highly dynamic and flexible. They usually respond instantly to changes in the financial markets. There is often no time limit on the account, and some money market accounts may be opened and closed within a very short period of time, during which period the investor has capitalised on some fluctuation in the markets. Those who wish to find out more about money market accounts can contact their local bank, or visit http://www.interest-rates.org.uk.

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