What is a Super Money Market?

John Lister
John Lister
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Woman posing

"Super money market" is a term used to describe some money market accounts. The term is not standardized and is more of a marketing phrase than a hard classification. As a general rule, it applies to money market accounts that require high balances and pay favorable dividends.

A money market account is a type of account designed to bridge the gap between standard deposit accounts, which allow unlimited transactions but cannot pay interest, and savings accounts, which allow few transactions but can carry interest. A money market account normally allows up to six withdrawals, such as a check or electronic transfer payment, to third parties each month.

The money deposited into a money market account is used by the bank to invest in government and corporate securities. The best known of these investments are bonds. Some of the proceeds from the investments fund the interest payments made on the accounts. The interest payments are sometimes described as dividends.

A super money market account usually differs from a standard money market account in two ways. First, the minimum balance required may be considerably higher. While amounts vary, the “super” designation is usually associated with a balance of at least $10,000. How this requirement is enforced can vary. In some cases the interest will be worked out on a daily basis and thus lowered in proportion to the number of days the balance is below the minimum. In other cases, the bank may make an interest payment only if the balance has been above the minimum continuously since the last interest payment date.

The second difference is that a super money market account will pay a higher interest rate. Again, the precise details can vary immensely. As an example, as of 2011 most banks offered rates somewhere in the range of 1.5 to 1.7 times as much on a super money market account compared with a standard money market account.

With the “super” designation not standardized, potential investors cannot rely on the name alone in choosing a money market account. The details on offer will vary depending on the bank. It's worth noting that with some banks, the super money market account does not have the highest minimum balance requirement or the highest interest rate in the bank's range of products; those may be offered under another name, such as jumbo money market account.

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