Can You Lose Money In A Money Market Account?

Ben Luthi   Updated Mon, Sep 11, 2023

Money market accounts act as a hybrid between a checking account and a savings account, offering higher interest rates and flexible access to your funds — albeit with some limitations.

It's technically possible to lose money in a market account, but not in the same way you can lose money in an investment account. Depending on the terms of your money market account, you could lose value to fees and inflation.  If you're considering putting your money in a money market account for short-term savings goals, here's what you should know.

What is a money market account?

A money market account is a type of deposit account that you can use for short-term savings. Like a checking account, a money market account typically allows you to access your funds through a linked debit card, paper checks, or an ATM card.

At the same time, money market accounts often provide higher interest rates than traditional savings accounts, although they also usually come with the same monthly withdrawal limits. If you withdraw money more than six times in a month, you may incur a fee with each additional withdrawal.

Money market accounts may have steep deposit requirements and even charge a monthly fee, though you may be able to get the charge waived if you maintain a minimum balance. Your interest rate may be flat regardless of your balance, or you may be offered tiered rates based on your balance.

Can you lose money in a money market account?

Unlike an investment account subject to risk, you won't lose money in a money market account due to investment losses. However, there are other ways your account balance can decrease over time or lose value in the long run:

You can lose money to fees: If your account charges a monthly fee that you can't get waived, or you end up dealing with other fees, such as excessive withdrawal penalties, your account balance could drop if the fees exceed the interest you earn in the account.

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