Can Money Market Accounts Lose Money?

If you are saving for something important—like a new car, home improvement project, or rainy-day fund—you want your money to be safe while it grows. Many people use money market accounts for this very reason. But one common question often comes up: Can money market accounts lose money? Let’s find out!

How Money Market Accounts Work

Money market accounts are special types of savings accounts. What makes them “special?” For starters, money market accounts usually pay higher interest rates than standard savings accounts. These rates aren’t fixed—they change with the overall market conditions, which you cannot control. That being said, you CAN control the tiered portion of the rate. Money market interest rates increase with your balance: the more you save, the more you earn. Ultimately, this means your money grows faster!

Another key benefit of money markets is their accessibility. Most regular savings accounts have strict rules about withdrawals and transactions, but money market accounts typically have convenient check-writing features and debit card capabilities. Therefore, it’s easy to access your money whenever you need it.

Can Money Market Accounts Lose Money?

The short answer is no. As long as your balance stays within federal insurance limits (under $250,000) and you meet account requirements, money market accounts cannot lose your money at FDIC banks.

These accounts protect your principal balance, which is the amount of money you deposit in the beginning, and they are also considered very low risk. Your balance will not drop, even if interest rates change.

Sometimes, people confuse money market accounts with money market funds, but they are quite different. Money market funds are not FDIC insured and can lose their value. In contrast, true money market accounts keep your money safe. There is always a chance of earning less interest (depending on market conditions), but you won’t lose your savings.

FYI: Before You Invest with a Money Market Account

While your balance is protected in your money market account, there are still a few things worth considering:

• Money Market Rates Can Change: Your earnings may go up or down, depending on the economy.
• Withdrawal Restrictions May Apply: Some banks will limit your number of monthly transactions.
• Minimum Balances: To earn the best rates or avoid fees, some accounts require you to maintain a higher balance.
• Account Obligations: You may face extra fees if you don’t meet certain account requirements, which could reduce your balance slightly.
• Opportunity Cost: If other savings or investment options offer better returns, you could miss potential earnings.

The good news? None of these factors threaten your deposits. They simply affect how much you earn and how easily you can access your funds.

Academy Bank Money Market Accounts

If you want to grow your savings without extra risk, money market accounts strike the perfect balance. Your safety comes first at Academy Bank, and our Premier Money Market Account offers the best of both worlds: growth and security.

Why open a money market account with Academy Bank?

• Tiered money market rates, offering competitive returns for higher balances
• Flexible access with debit cards, checkbooks, in-branch support, and online and mobile banking*
• FDIC deposit insurance
• Nationwide ATM network perks with no-fee ATMs**
• Overdraft protection by linking your money market and checking account

At Academy Bank, your money stays safe, earns interest, and is ready when you need it. Learn more about our personal money market and business money market accounts to see how you can grow your savings!