A money market account is a savings account that pays higher interest than a regular savings account, but requires you to keep a larger balance and limits how often you can withdraw
A money market account (or MMA) sits between a regular savings account and a certificate of deposit. You deposit money, the bank pays you interest on that balance, and you can withdraw when you need to — but the bank sets rules about how much you must keep in the account and how many times per month you can take money out. The interest rate is usually higher than a basic savings account because the bank is asking you to leave more money there and touch it less often.
The name comes from the money market — the place where banks and large institutions lend money to each other for short periods. Your money market account lets you, as an individual customer, earn a rate closer to what those institutions earn, in exchange for keeping a bigger balance and being less active with withdrawals.
Key Takeaways
- Money market accounts require a minimum balance (often $2,500 to $25,000, depending on the bank) to open and maintain, or you may face monthly fees.
- The interest rate is higher than a regular savings account but lower than a certificate of deposit, and it can change whenever the bank decides.
- You can usually withdraw money whenever you want, but federal rules limit you to six withdrawals per month before the bank can charge a fee or close the account.
- Money market accounts are insured by the FDIC (at banks) or NCUA (at credit unions) up to $250,000, so your money is protected if the institution fails.
How the minimum balance works
Most banks require you to keep a certain amount of money in a money market account at all times. This amount varies widely — some banks set it at $2,500, others at $10,000 or more. A few online banks have no minimum, but they are less common.
If your balance drops below the minimum, the bank will usually charge you a monthly fee (often $10 to $25) until you bring it back up. Some banks will close the account if you fall short for too long. Before opening a money market account, check what the minimum is and whether you can comfortably keep that much money sitting there without needing it.
Interest rates and how they change
The interest rate on a money market account is not fixed — the bank can raise or lower it whenever it wants. When the Federal Reserve raises interest rates (which happens when the economy is strong), banks usually raise the rates they offer on savings products. When the Fed lowers rates, banks typically lower theirs too. You will see the rate change reflected in your account statement each month.
Because rates change, a money market account that pays well today might pay less well in six months. Some people move their money to a different bank if rates drop too far. Others stay put because switching accounts takes time and effort. There is no penalty for moving your money to another bank — you straightforward withdraw it and deposit it elsewhere.
Withdrawal limits and how they work
Federal rules say you can make up to six withdrawals or transfers out of a money market account per month. This includes withdrawals at an ATM, checks you write, transfers to another account, and payments you set up online. Deposits do not count against this limit — you can deposit as much as you want.
If you exceed six withdrawals in a month, the bank can charge a fee for each extra withdrawal (usually $10 to $25 per transaction) or close your account. Some banks are stricter than others about enforcing this rule. If you think you will need to withdraw money more than six times a month, a regular savings account or checking account is a better fit.
Money market accounts versus other savings products
| Account Type | Minimum Balance | Interest Rate | Withdrawal Limits | Best For |
|---|---|---|---|---|
| Regular Savings Account | Often $0 to $500 | Very low (0.01% to 0.05%) | Unlimited | Building a habit of saving small amounts |
| Money Market Account | $2,500 to $25,000 | Moderate (currently 4% to 5%) | Six per month | Saving a larger amount you will not touch often |
| Certificate of Deposit (CD) | $500 to $10,000 | Higher (currently 4.5% to 5.5%) | None until maturity date | Money you will not need for a set period (3 months to 5 years) |
| Checking Account | $0 to $500 | Little to none | Unlimited | Paying bills and everyday spending |
A regular savings account has a lower minimum and no withdrawal limits, but pays almost no interest. A certificate of deposit pays more interest than a money market account, but you cannot touch the money until a set date without paying a penalty. A checking account is for spending, not saving. Choose a money market account if you have a larger amount to save, will not need it for everyday expenses, and want a rate better than a basic savings account.
FDIC and NCUA protection
Money market accounts at banks are insured by the FDIC (Federal Deposit Insurance Corporation) up to $250,000 per account owner, per bank. This means if the bank fails, the government will return your money up to that limit. Money market accounts at credit unions are insured by the NCUA (National Credit Union Administration) with the same $250,000 limit.
If you have more than $250,000 to save, you can open accounts at multiple banks or credit unions to keep all your money insured. The insurance covers the account itself, not the interest rate — if the bank goes under, you get your principal back, but you do not earn interest during the process.
When a money market account makes sense
A money market account works well if you have saved $5,000 or more and want it to earn interest without locking it away. It is useful for an emergency fund that sits untouched most months, or for money you are saving toward a goal six months or more away. It is less useful if you are still building your first $1,000 in savings, or if you need to withdraw money more than once or twice a month.
Online banks often offer higher rates on money market accounts than brick-and-mortar banks, but they have no physical branch where you can deposit cash. If you prefer to deposit cash in person, a local bank or credit union may be your better choice, even if the rate is slightly lower.
Frequently Asked Questions
Can I write checks from a money market account?
Some banks let you write checks on a money market account, but not all. Checks count toward your six-withdrawal limit per month. Ask the bank before opening the account whether check-writing is included and whether checks count against the limit.
What happens if I go below the minimum balance?
The bank will charge you a monthly fee (usually $10 to $25) until your balance goes back above the minimum. If you stay below the minimum for several months, the bank may close the account. Check your account agreement to see how long the bank will wait before closing.
Is the interest rate may provide to stay the same?
No. The bank can change the rate whenever it wants. You will see the new rate on your monthly statement. If the rate drops significantly, you can move your money to a different bank without penalty.
How is interest calculated and paid?
Interest is usually calculated daily based on your balance and paid monthly into your account. The more money you keep in the account, the more interest you earn. Some banks pay interest quarterly or annually instead — check your account agreement.
Can I have a money market account and a regular savings account at the same bank?
Yes. You can have both, and the $250,000 FDIC insurance limit applies to each account separately. This is useful if you want a high-interest money market account for long-term savings and a regular savings account for smaller, more frequent withdrawals.