Money Market Account
Definition
A deposit account that combines features of savings and checking accounts, typically offering higher rates than regular savings with limited check-writing and debit card privileges.
A money market account (MMA) is a hybrid between a savings account and a checking account. It typically offers interest rates comparable to high-yield savings accounts while providing limited transaction capabilities — usually 6 transactions per month, with some check-writing or debit card access.
Money market accounts should not be confused with money market funds, which are mutual funds that invest in short-term debt securities. Money market accounts are bank deposit products covered by FDIC insurance. Money market funds are investments that are not FDIC-insured (though they're considered very safe).
MMAs typically require higher minimum balances than regular savings accounts — often $2,500 to $25,000 to open or avoid monthly fees. In return, they offer tiered rates where larger balances earn higher APYs. This makes them suitable for people maintaining substantial cash reserves.
The transaction limit was historically enforced by Regulation D, which limited savings account transactions to 6 per month. While the Fed suspended this rule in 2020, many banks still maintain the limit. Check your bank's specific policies before relying on an MMA for frequent transactions.
For portfolio management, money market accounts serve as a holding place for cash waiting to be invested, a repository for funds between transactions, or a higher-yielding alternative to keeping large balances in a checking account that earns little to no interest.
Where this appears in Clarity
Clarity automatically tracks and calculates these concepts across your connected accounts.
Related Terms
Frequently Asked Questions
What's the difference between a money market account and a money market fund?
A money market account is a bank deposit product, FDIC-insured up to $250,000. A money market fund is a mutual fund investing in short-term securities, not FDIC-insured but very low risk. They sound similar but are fundamentally different products with different risk profiles.
Is a money market account better than high-yield savings?
They're very similar. MMAs sometimes offer slightly higher rates for large balances and limited check-writing. HYSAs are simpler with no minimum balance requirements at many banks. For most people, a HYSA is the better choice unless you need occasional check-writing from your savings.