What Is a Money Market Account?
In plain English
A money market account (MMA) is an interest-bearing deposit account that typically offers higher APYs than regular savings accounts while providing some checking features like debit card access and check writing. MMAs often require higher minimum balances and are FDIC insured up to $250,000.
How Is a Money Market Account Different from a Savings Account?
Money market accounts generally offer higher interest rates, especially on larger balances, and include check-writing and debit card privileges that most savings accounts lack. The trade-off is that MMAs typically require higher minimum deposits and minimum balances to avoid fees or earn the advertised rate. Both account types are FDIC insured.
What Is the Difference Between a Money Market Account and a Money Market Fund?
A money market account is a bank deposit product that is FDIC insured. A money market fund is a mutual fund that invests in short-term debt securities and is not FDIC insured. Money market funds may offer slightly higher yields but carry a small risk of losing value. The two products serve different purposes despite similar names.
Who Should Open a Money Market Account?
MMAs are well suited for people with larger cash reserves who want higher yields than a basic savings account while maintaining some transaction flexibility. They work well for emergency funds above the minimum balance threshold or for holding cash you plan to deploy within a few months, such as a home down payment.
Frequently asked questions
Are money market accounts safe?
Yes. Money market accounts at FDIC-insured banks are protected up to $250,000 per depositor, the same as savings and checking accounts. Your principal is not at risk.
What is a typical minimum balance for a money market account?
Minimum balance requirements vary widely — from $0 at some online banks to $10,000 or more at traditional banks. Falling below the minimum may trigger monthly fees or reduce your interest rate to a lower tier.
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Related terms
Savings Account
A savings account is a deposit account that earns interest on your balance while keeping your money accessible for withdrawals.
APY
APY (Annual Percentage Yield) measures the total interest you earn on a deposit account over one year, including the effect of compounding.
FDIC Insurance
FDIC insurance protects your bank deposits up to $250,000 per depositor, per bank, if the bank fails. It is backed by the full faith of the U.S. government.
High-Yield Savings Account
A high-yield savings account offers significantly higher interest rates than traditional savings accounts, typically available through online banks.