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How does a money market deposit account generally compare with an ordinary savings account?
AHigher interest rate, with a higher minimum balance
BLower interest rate, with a lower minimum balance
CHigher interest rate, with no limit on withdrawals
DLower interest rate, with no limit on withdrawals
Answer & Solution
Correct answer: A. Higher interest rate, with a higher minimum balance
1. A money market deposit account generally pays a higher rate than a savings account.
2. The trade for that rate is a higher minimum balance.
3. The number of withdrawals allowed each month is also generally limited.
4. So the pairing is higher rate with higher minimum balance.
5. Options promising no limit on withdrawals contradict the monthly restriction.
_Source: FDIC Money Smart for Adults (September 2018), Module 5: Your Savings, section Other Places for Savings_
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