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What is a money market account?

Rick Murray

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Money market account (MMA) is an interest-bearing account, which you can open in most US banks. It seems like an ordinary saving account but has some differences.

The key difference of MMA from a savings account is how the bank uses your money. If you put money in a savings account, the bank has a limitation on its use for a loan (by law). But if you put your money in MMA, the bank can invest it in a loan or other low-risk assets to another borrower. Minimal deposit amount in MMA should be higher than the deposit on standard saving account; the lower threshold starts from $500 or $1000 (depends on the bank). The minimal account balance of MMA also should be higher.


But MMA also has several perks for you:

  • interest rate of MMA is higher than saving account;
  • as well as a savings account, MMA is protected by Federal Deposit Insurance Corporation (FDIC);
  • you have access to funds in the form of debit card transactions or ATM withdrawal. The law allows you to use it a maximum six times per month (many banks usually allow 3 or 4 times).
  • If you need an account more liquid than a savings account and want to earn more interest rate than a checking account, you can use MMA.
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