Re: How Does a Money Market Account Work?
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I understand there is a bit more risk than standard savings accounts...why?
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Money market accounts invest in very short term paper... there is a very small risk, but it is not secured, thus disclaimers.
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Also, how do these companies make money on the deposits while protecting against the short term need for withdrawals etc ?
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Money Market accounts protect against withdrawal risk by being aware of their "normal" withdrawal related needs and timing their transactions so they are able to cover any needs. Also they usually have a line of credit to draw on in "unusual" circumstances.
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Using ING and Emigrant as examples, how much do these companies figure to profit on deposits if they are giving out 3.75-4%?
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These banks are usually taking your money on deposit and loaning it out to others. That is how they make their profit!
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