Illustrated by Chelsea Miller
Last Updated May 16, 2024
2 min read

Money Market Accounts

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There are many options for keeping your money safe and earning a little extra from interest. Like a savings account or CD, a money market account (MMA) is a way to earn interest on money that you deposit at a bank or credit union.

A Happy Medium

An MMA could be seen as a happy medium between a savings and checking account. That’s because an MMA offers the ease of a checking account and the earning potential of a savings account—in other words, high interest rates and accessibility. In fact, an MMA will usually offer higher interest rates than a typical savings account. This means that you can earn more in interest on the same amount of deposited money.

Easy But Limited Access

One of the biggest benefits of an MMA is that you usually have easier access to your money than other savings accounts. Money market accounts will often come with checks, a debit card, or an ATM card, meaning that you don’t need to transfer money to a checking account before making payments or purchases. This makes it easy to use your MMA when you’re in a bind or need quick access to more money than is in your checking account.

marker reading hundred dollar bill with the bill missing
Chelsea Miller

But an MMA doesn’t work exactly like a checking account. There are almost always limits on the amount of transactions that can take place within a specified time period (generally between 3 and 6 in a month). These transactions can include certain transfers, payments, and other ways that you access your money. When that limit is reached, you can face penalties or fees for additional transactions. If you’re considering an MMA, be sure to check with your bank or credit union for specific regulations.

Higher Thresholds

To go along with a higher interest rate, an MMA will often require a bigger initial deposit when it’s opened. The minimum required balance, or amount of money that must remain in the account if you want to avoid fees, is also often higher. This can make it more difficult to open and maintain an MMA than a traditional savings account with a lower threshold.

Fun But Not a Fund

While they may have similar names, a money market account and a money market fund are not the same thing. A money market fund is a type of mutual fund, or a form of investment shared between multiple people. Investors purchase sections of the portfolio, or total amount, called shares. Money market funds generally focus on short-term, relatively low risk investments. But beware, unlike a money market account that functions like a savings account, it’s possible to lose the money you invest in a money market fund.

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