The average savings account interest rates remain depressingly low. In fact, according to a popular financial site, the average savings account interest rate in 2019 was just 0.09 percent, with some banks paying as low as 0.01 percent. 

While saving is always smart, the value of compound interest is drastically reduced with interest rates at these low levels. Because of this, exploring other places to stash any extra money is smart and money market deposit accounts can be an excellent option. 

If you are looking for a more financially rewarding way to save for your future, this information about money market deposit accounts may be just what you need to counter today's continued low savings account interest rates. 

What is a money market deposit account? 

Unlike most standard checking accounts, money market deposit accounts earn interest, while still offering account holders the opportunity to write checks on the balance. Instead of paying the current small fixed rate of interest of a standard savings account, however, a money market deposit account offers daily compounding of interest, usually at a higher rate than that of a standard savings account. 

It is important to note that money market deposit accounts (MMDAs) and money market funds are not the same. Money market funds are used for investing in the stock market and must be managed wisely to minimize the risk for losses. 

Are money market deposit accounts insured? 

The Federal Deposit Insurance Corporation (FDIC) insures standard bank checking and savings accounts up to a quarter-million dollars, per depositor and institution. Credit unions offer similar insurance coverage.

Consumers, however are sometimes confused about whether money market deposit accounts are also covered by the FDIC and NCUA. To clarify this, it is important for consumers to remember that money market deposit accounts are very similar to savings and checking accounts, while money market funds are a different investment vehicle with potential for loss due to market fluctuations.

Because of this potential for risk, money market funds cannot be insured under the FDIC or NCUA guidelines. Money market deposit accounts, however, are fully insured. 

What should be asked before opening a money market account? 

Consumers who are ready to open a money market deposit account should always ask several questions. In addition to the current interest rate that is being offered, it is important to ask how many checks are allowed to be written without penalty, what actions might incur a penalty, and any penalty amounts.

Since there are both advantages and disadvantages to money market accounts, depending on the consumer's actual financial situation, it is always important to discuss concerns with the bank or credit union before setting up the account.