What is a Money Market Account, Requirements, Advantages, Disadvantages, Comparisons, Working and Safety

Are you wondering “What is a Money Market Account” (MMA) and what are its requirements? MMA refers to an interest-bearing account at a bank or credit union and has specific features that aren’t available in any other kind of account. Such accounts are also termed money market deposit accounts (MMDA). 

MMDAs have a higher interest rate than regular passbook savings accounts as they include check-writing and debit card privileges. Meanwhile, they have more restrictions as well. Hence, one needs to utilize the accounts while calculating tangible net worth. 

What is a Money Market Account and its Benefits?

Traditional cards, credit unions, and online banks offer Money Market accounts as a financial product to their customers. Upon the demand from the consumers, they have added various features for the benefit of the card users. 

The key benefits include:


What is a Money Market Account? Interest

Like saving accounts in the bank, one can also earn interest on their balance through the MMA. To make it more appealing to the people, they have higher interest rates than traditional accounts. As the market condition rises or falls, the interest rate varies on them. 

Debit Cards 

Presently, everyone either makes payments through online platforms or a debit card. Hence, some banks allow their users to use automated teller machines (ATMs) to deposit, withdraw, or transfer amounts with ease. 

How to guide of Vanilla Gift Card Check Balance


The account owners also have the facility to write checks against their account balances through MMDA. 

Requirements for MMAs

Are you wondering if there is any requirement for an initial deposit to open an MMA? Yes, there’s and you need to maintain a certain balance threshold to keep it active as well. While visiting the bank to create an account, you can ask for the details from the bank manager as well. 

If a client’s balance falls below the minimum amount, banks might employ service charges on it. Keep this online while getting an account that people usually obtain the MMA because they want to earn higher interest than regular users. 

This method isn’t feasible for clients with saving accounts with long-term goals. However, if you have a short-term objective like buying an appliance, planning a vacation, getting an apartment, or something similar, this technique is suitable for you to save money. 

Advantages and Disadvantages of MMA and MMDA 

After knowing “What is a Money Market Account,” you need to know its pros and cons. While comparing it to other types of bank accounts, you can analyze the higher interest rates, check writing, and debit card privileges. 

Apart from that. There are monthly fees for other additional expenditures that the banks can impose on your balance, making it fall below the minimum. Henceforth, you need to be aware of such factors as well while creating an account. 

If you are wondering, are MMDA accounts secure and authorized? They have federal insurance protection,  insured by the Federal Deposit Insurance Corporation (FDIC). Whereas, other credit unions’ products are authorized by the National Credit Administration (NCUA). 

FDIC and NCUA cover accounts which gave $250,000 er depositervper bank. They also include MMA as well. Joint accounts have a restriction of $500,000.345, while the multiple insurable accounts count toward $250,000. Multiple sharing accounts have checking, savings, and certificates of deposit under their umbrella. 


  • Higher interest rates
  • Check writing 
  • Debit cards 
  • Insurance protection


Potential disadvantages of the MMA are:

  • Limited transactions 
  • Fees 
  • Minimum balance requirements 

Comparison of Money Market Accounts, Checking Accounts, and Saving Accounts 

One of the charms of market accounts is higher interest rates. The average interest in Nay 2022 is 0.08%. Meanwhile, the savings are paid about 0.07%. Unlike saving accounts, it offers multiple features and options rather than a checking account. 

Whereas, money market and checking accounts have various similarities, such as making multiple deposits without any restriction. Some of the users can even make point of sale (POS) through their checks or cards.

How Does a Money Market Account Work?

How Does a Money Market Account Work?

As you have already understood in “What is a Money Market Account,” it has features of saving and checking accounts. The number of withdrawals is permitted to sic times, which is similar to saving accounts. Whereas, it acquires interest at competitive rates (which is opposite to checking accounts) based on the balance of the account holder.

Moreover, they have limited access to funds, optimum for short-term goals or building an emergency fund. Unlike a CD which requires you to withdraw the money in a specific timeline, there are no such restraints here. If you are facing an emergency and want to withdraw the amount, you can do it effortlessly. 

Are Money Market Accounts Safe?

MMA’s are quite safe and reliable as the FDIC authorizes them if the bank fails to protect them. The ownership and its fees of up to $250,000 per deposit ensure the reliability of the account. This means that if you have your amount in a checking and market account under a bank, FDIC will protect them both. 

If the amount is above $250,000, then the FDIC won’t ensure the safety of your money. NCUA protects the federally insured union cards and has similar rules to FDIC. 

How to Choose The Best Money Market Account? 

How to Choose The Best Money Market Account? 

To choose the best MMAs, you need to know the following details: 

  • What is a Money Market Account
  • What does the bank offer 
  • Highest APYs available on the platform (how you will receive interest over the years)
  • Account Restrictions 
  • Penalty and fees for closing or using the account for extensive periods
  • Ensure monthly maintenance fees, excess withdrawal fees, inactive account fees
  • Options for accessing funds 


Do your research on Money market accounts and choose them if you are looking for a safe option to store shorter-term savings or an emergency fund. Make sure to compare it with other traditional and union card accounts, and then decide for yourself. 

The restrictions, working, features, advantages, and disadvantages are necessary to look over. Shop around for the best rates, and features, and look out for minimum balance requirements before selecting or creating a money market account.

Share your opinions on What is a Money Market Account in the comments section. 

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