What is money markets?

Investopedia defines money market as a segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year.

Money market securities consist of negotiable certificates of deposit (CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos).

A money market account, on the other hand is an interest-bearing account that typically pays a higher interest rate than a savings account, and which provides the account holder with limited check-writing ability. A money market account thus offers the account holder benefits typical of both savings and checking accounts.

This type of account is likely to require a higher balance than a savings account, and is FDIC insured.

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Get some tips to guide you as you evaluate each facet of a prospective money market account from Money-Rates.com.