A money market account is a hybrid between a savings account and a checking account
A money market account (MMA) is a deposit account that combines features of both savings and checking. You earn interest on your balance, like a savings account does. But you also get a debit card or checkbook to withdraw money, like a checking account does. The tradeoff is that the bank limits how many withdrawals you can make per month — usually six — and requires a higher opening deposit than a regular savings account.
The interest rate on a money market account is typically higher than what you'd earn in a standard savings account, but lower than what a certificate of deposit (CD) offers. Banks set their own rates, so the rate you see at one bank may be quite different from another. The rate also changes over time as the Federal Reserve adjusts its benchmark rate.
Money market accounts are FDIC-insured at most banks, meaning your money is protected up to $250,000 per account owner if the bank fails. This makes them safer than keeping cash at home or investing in stocks.
Key Takeaways
- A money market account earns interest and lets you write checks or use a debit card, but limits you to about six withdrawals per month.
- Interest rates vary by bank and change with market conditions, so comparing rates across institutions can make a real difference in what you earn.
- You need a higher minimum deposit to open a money market account than you typically do for a regular savings account.
- Money market accounts are FDIC-insured up to $250,000, protecting your balance if the bank fails.
- Exceeding the withdrawal limit usually costs you a fee per extra transaction, so these accounts work best for money you don't access frequently.
How the withdrawal limit works in practice
Federal rules once capped money market account withdrawals at six per month. That rule was suspended in 2020, but most banks kept the limit anyway because it helps them manage cash flow. If you exceed the limit, the bank charges a fee — typically $10 to $25 per extra withdrawal — or may convert your account to a regular savings account.
The limit applies to transfers and withdrawals, but not to deposits. You can deposit money as often as you want. Withdrawals made at an ATM, by check, or through a transfer to another account all count toward the six. Withdrawals at a teller window also count. Some banks count online transfers differently, so read your account agreement to know the exact rules for your bank.
This limit is why money market accounts work best for money you plan to keep relatively untouched. If you need to move money in and out frequently, a regular checking account or high-yield savings account (which has no withdrawal limit) is a better fit.
Minimum deposit and fees to watch for
Most banks require a minimum opening deposit of $2,500 to $10,000 to open a money market account, though some credit unions and online banks have lower minimums. A few banks have no minimum at all. Check the specific bank's requirements before you start the process.
Beyond the withdrawal-limit fee, money market accounts can charge a monthly maintenance fee if your balance falls below a certain threshold — often $2,500 or $5,000. Some banks waive this fee if you set up direct deposit or maintain a linked checking account with them. Read the fee schedule before you open the account, because a high fee can eat into the interest you earn.
Overdraft fees also explore if you write a check or use your debit card and don't have enough money in the account. These fees are usually $25 to $35 per overdraft. Some banks offer overdraft protection, which links your money market account to a checking account and automatically transfers money if you overdraw.
Money market accounts versus savings accounts and CDs
A regular savings account has no withdrawal limit and usually requires a lower minimum deposit, but pays less interest. A money market account pays more interest but restricts how often you can withdraw. If you need to access your money regularly, a savings account is simpler. If you have a lump sum you won't touch for several months, a money market account may earn you more.
A certificate of deposit (CD) typically pays the highest interest rate of the three, but locks your money away for a set term — anywhere from three months to five years. If you withdraw before the term ends, you pay a penalty. A money market account gives you more flexibility: you can withdraw whenever you want (up to six times per month), but you earn less interest than a CD would.
| Account Type | Interest Rate | Withdrawal Limit | Minimum Deposit | Best For |
|---|---|---|---|---|
| Savings Account | Lower | None | $0–$500 | Frequent access to money |
| Money Market Account | Medium | ~6 per month | $2,500–$10,000 | Money you access occasionally |
| Certificate of Deposit | Higher | None until maturity | $500–$2,500 | Money you won't need for months or years |
Where to find money market accounts and compare rates
Most traditional banks offer money market accounts, as do credit unions and online banks. Online banks often pay higher interest rates because they have lower overhead costs. However, online banks may have fewer physical branches if you prefer in-person service.
Interest rates change frequently, so comparing rates across multiple banks is worth your time. Websites like Bankrate, DepositAccounts, and the banks' own websites show current rates. When you compare, look at the annual percentage yield (APY), not just the interest rate — APY includes the effect of compounding and tells you the true amount you'll earn in a year.
Before you open an account, confirm that the bank is FDIC-insured (for banks) or NCUA-insured (for credit unions). This information is usually displayed on the bank's website or you can search the FDIC or NCUA database by bank name.
When a money market account makes sense for your situation
A money market account works well if you have money set aside for a specific goal — a car down payment, home repairs, or a vacation — that you plan to fund over the next few months but won't need when ready. The higher interest rate means your money grows while you save, and the debit card or checkbook gives you access when you're ready to spend.
It also makes sense if you have an emergency fund that's grown beyond what you need in a checking account. Moving the excess to a money market account earns you interest without locking the money away like a CD would. You can still withdraw it if a real emergency happens, though you're limited to six withdrawals per month.
A money market account is less useful if you're saving for something more than a year away — a CD would earn you more interest. It's also not ideal if you need to move money in and out frequently, because you'll hit the withdrawal limit and pay fees.
Frequently Asked Questions
Can I use a money market account like a checking account?
Partially. You get a debit card or checkbook, so you can make purchases and pay bills. But you're limited to about six withdrawals per month. Once you exceed that, you pay a fee per extra withdrawal. For frequent transactions, a regular checking account is better.
What happens if I go over the six withdrawal limit?
The bank charges a fee — usually $10 to $25 — for each withdrawal beyond the limit. If you repeatedly exceed the limit, some banks convert your account to a regular savings account, which has no withdrawal limit but also no debit card or checkbook.
Is my money safe in a money market account?
Yes, as long as the bank is FDIC-insured. Your balance is protected up to $250,000 if the bank fails. Credit unions offer the same protection through NCUA insurance. Your money is not invested in the stock market, so you won't lose it due to market downturns.
How often does the interest rate change?
Banks can change the rate whenever they want, though they usually move in response to Federal Reserve rate changes. Some banks adjust rates weekly or monthly. Check your bank's policy and monitor your account statements to see if your rate has changed.
Can I open a money market account if I have bad credit?
Yes. Banks don't run a credit check for deposit accounts. However, they may check ChexSystems, a banking history database, to see if you've had problems with past accounts. If you've been flagged for fraud or bounced checks, some banks may decline to open an account for you.