Money Market Accounts

In the United States, the term Money Market Account or MMA usually refers to a liquid funds account placed in a form of savings account that is held with a retail financial institution — usually a bank or savings and loan corporation — that does not have a given maturity date and offers a higher and variable rate of interest that fluctuates according to levels in the money market. Depending on the credit union or bank it may set interest tiers or monthly withdrawal limitations.

What are other similar types of money market account products?

Depending on the institution it can have various product names these can include but not limited to money market accounts (MMA), money market savings accounts (MMSA) or money market deposit accounts (MMDA). Other different types include money market certificates that are similar to certificates of deposit because they have fixed maturity dates, as well as Money Market Funds that consist of mutual funds that invest in short term debt instruments.

Money Market Accounts vs Savings Accounts?

Although the terms of a specific money market account can vary among financial institutions and countries these can tend to differ from ordinary savings accounts because they allow withdrawals via check or debit card, similar to a checking account, although they differ from basic checking accounts because they tend to offer a higher rate of interest on balances.

For example, in the United States, a higher rate of interest can be paid on money market account made into retail bank savings accounts provided that the account’s balance stays above $1,000. When the balance falls below that amount, a lower rate of interest is then paid commensurate with that rate paid on a Negotiable Order of Withdrawal or NOW account, which is essentially just a checking account that pays interest.

Which companies provide money market accounts?

This product is offered by retail banks, savings and loan corporations and credit unions that are usually regulated within the country in which they operate. Users of this product include individuals, businesses and financial institutions in the United States as a means of storing their liquid funds for future use.

What is the risk of a money market account deposit and its rate of return?

Substantial investment security is provided by held with reputable and insured financial institutions, but as a result of this perceived lack of risk, they usually only offer a low variable rate of return or interest to the holder on deposits. Higher returns can sometimes be obtained from online sources, but the risks involved in doing so may be greater, especially if the financial institution taking the deposit is uninsured and/or poorly capitalized.

Are money market accounts protected?

In the United States, funds placed into a mma are protected up to a certain amount set by the Federal Deposit Insurance Corporation or FDIC if the deposit made is with a financial institution that is also an FDIC member.

Money Market Account Interest Rates around the World