Money Market Deposit Account
What Is a Money Market Deposit Account?
A money market deposit account (MMDA) is a type of savings account offered by banks and credit unions that typically pays higher interest rates than traditional savings accounts while allowing limited transaction access. MMDAs combine features of both savings accounts and checking accounts.
These accounts may allow limited check writing, debit card access, or electronic transfers.
Why It Matters
Money market deposit accounts provide a way to earn higher returns on savings while maintaining access to funds. They are often used for emergency savings, short-term financial goals, or storing cash that may be needed soon.
Because they are deposit accounts, funds held in MMDAs are generally protected by deposit insurance when held at insured financial institutions.
How Money Market Deposit Accounts Work
Customers deposit money into the account and earn interest based on the account’s annual percentage yield (APY).
Typical features include:
- higher interest rates than standard savings accounts
- limited withdrawals or transfers per month
- minimum balance requirements
- check-writing or debit access
Deposits at insured banks are protected by FDIC insurance, while deposits at credit unions are protected by NCUA insurance.
Money Market Deposit Account vs Money Market Fund
- A money market deposit account is a bank or credit union savings product.
- A money market fund is an investment product offered through brokerage firms.
Only deposit accounts are covered by deposit insurance.
FAQs About Money Market Deposit Accounts
Are MMDAs safe?
Yes, when held at insured banks or credit unions.
Do money market deposit accounts require large balances?
Some accounts require minimum balances to earn higher interest rates.
Can money be withdrawn anytime?
Withdrawals are generally allowed but may be limited.
Related Terms
