The Basics of Money Market Account (MMA)

In any bank, you get to choose from many types of accounts depending on the purpose. Not all accounts are suited for you, so you should be sure before applying for one. Depending on the type you want, some requirements must be met in full. This way, you can successfully register for it.

A money market account is one type that you can open in any bank to safely keep your money. Money kept in this account bears some interest depending on the rate offered. You can access this money at any time you like and have the option of writing checks. This is where it differs from a savings account. You have a limit to how many times you can access a savings account each month.

One fact to keep in mind is MMAs require a deposit to open and start bearing interest. The amount is higher than what most checking accounts require. It’s important to note this so that you don’t confuse the two. Though they share some similarities, they are not the same. Money saved in an MMA yields higher APY at the end of each year.

The reason you might want to open a money market account is to create an emergency fund that can come in handy in the future. You set this money aside and let it earn interest but can easily access it at any time with few restrictions or none at all. Due to the large amount required to open one, it’s the best for planning large projects or undertakings in the future that you must save up for.

Remember to refrain from an MMA for your daily expenses for that is not its purpose. Though it might resemble a checking account, it has restrictions to keep in mind. For one, it limits the number of checks you can write. Money kept in an MMA is secure since the account is insured by the Federal Deposit Insurance Corporation (FDIC).

Advantages of MMAs

1. High APY Interest Rates

One of the main considerations when saving money is an account with a higher Annual Percentage Yield (APY). You get to benefit from high yields when you choose to open an MMA. The difference between it and a savings account is that you’re not limited to the number of times you can access it. This works especially when you have emergencies requiring quick cash. The money is safe and secure thanks to the FDIC and earning interest. Though similar to a checking account, it earns a higher APY which is beneficial for your bottom line.

2. Checks

An MMA gives you the chance to write a limited number of checks. Even though the account is mainly for saving money, it doesn’t restrict you from writing a check when necessary. A savings account doesn’t permit you to write any checks. You can only access that account 6 times in one month. More access will result in penalties.

3. Liquidity

No advance notice is needed to withdraw money from your account. The account is always liquid and grants you access to all your money at a go.


An MMA is insured by the FDIC. You can relax when opening it knowing your money is safe. But remember there is a limit to how much is insured as per the law. The limit is normally set at $250000 only.

Disadvantages of MMAs

1. Easy Access

The account doesn’t limit how many times you can access the account. It’s easy to turn it into a spending account defeating its purpose. You can withdraw all your money at any time without a valid reason to do so.

2. Large Opening Balance

To open most MMAs, be ready to deposit a significant amount of money. It’s the best way to avoid additional charges like monthly maintenance fees.

3. Savings Account is Better

If you want to save money and not access it often, it’s better to open a savings account. It earns similar APY but is more restrictive. You can only access it 6 times in a month.

Purpose of Money Market Accounts

You can opt to open an MMA for a variety of purposes depending on your needs.

a) Vacation Fund

You might have the desire to go on your dream vacation but money always seems to slip through the fingers. Setting up an MMA helps you plan in advance and access the money when the time comes to make payments. The money is safe and insured by the FDIC.

b) Emergency Fund

It’s always prudent to have some emergency money saved up that you can easily access at a moment’s notice. The money remains in the account earning a high APY until the time you need to use it.

c) Tuition Fund

The balance limit for most MMAs is higher than that required in most accounts. You can opt to keep your tuition money in this account. It earns interest but still accessible when the time to pay for school approaches.

MMAs vs. Checking Account

Money Market AccountChecking Account
Most MMAs require a large minimum balance to waive the monthly maintenance fee.Most checking accounts don’t ask for a minimum balance or require a low amount.
An MMA earns a high APY rate similar to a savings accountSome checking accounts earn low APY rates or none at all
There are a limited number of checks you can write from this accountChecking accounts have an unlimited number of checks.
You can use this account to save up for a project that requires more moneyBeing a spending account, it’s hard to save money in this type of account
Money market account vs. checking account

A Money Market Account is good when you want to save money for some time. The money earns a high APY but is easy to access in case of an emergency. You can write checks from it. Remember you have a limit to how many times you can access the MMA but the account remains liquid. You are allowed to withdraw all your money without any notice given.