A money market account combines features of savings and checking accounts

A money market account (MMA) is a savings product that pays interest on your balance while letting you write checks or make debit card transfers. The trade-off is that you can only withdraw money a limited number of times per month—usually six times—before you face a fee. The account sits somewhere between a regular savings account (which has low withdrawal limits but simple rules) and a checking account (which has unlimited withdrawals but typically pays no interest).

Banks and credit unions offer money market accounts. The interest rate you earn depends on the current market rate, the size of your balance, and the institution. Rates change frequently and vary widely—some accounts pay 4% or higher, while others pay less than 1%. The minimum balance required to open an account also varies by bank, ranging from zero to several thousand dollars.

Key Takeaways

  • Money market accounts pay interest on your balance and allow limited check-writing or transfers, typically six per month before fees apply.
  • Your interest rate is set by the bank and changes based on market conditions, so the rate you see today may be different next month.
  • Deposits in money market accounts are insured by the FDIC (at banks) or NCUA (at credit unions) up to $250,000 per account owner.
  • Exceeding your monthly withdrawal limit usually triggers a fee of $10 to $25 per extra transaction, though some banks waive the fee once per statement period.
  • Money market accounts work best for money you want to earn interest on but may need to access within a few months, not for everyday spending.

How interest accrual and compounding work

Banks calculate interest on money market accounts daily or monthly, depending on the account terms. The interest is usually compounded—meaning you earn interest on your interest—and credited to your account monthly. If your account earns 4.50% annual percentage yield (APY), that rate is divided by 365 days, and the bank calculates how much you earn each day based on your balance that day.

The APY shown to you is the rate you would earn if you left your money untouched for a full year. If you withdraw money mid-month, you earn less interest that month because your average balance was lower. If you add money, you start earning interest on the new deposit right away. Some banks pay interest on the minimum balance you held during the month; others use the average daily balance. Check your account agreement to see which method your bank uses.

Withdrawal limits and what happens when you exceed them

Federal rules once capped money market account withdrawals at six per month, but that rule was suspended in 2020. However, most banks still enforce a six-withdrawal limit themselves as part of their account terms. The limit usually applies to transfers and checks combined—not to ATM withdrawals or in-person withdrawals at a branch, which typically do not count.

If you exceed the limit, your bank charges a fee, usually $10 to $25 per extra transaction. Some banks waive the fee once per statement period if you go over by accident. Others charge every time. A few banks have removed the limit entirely, though they may pay a lower interest rate in exchange. Before opening an account, ask the bank what counts toward the limit and what the fee is.

Minimum balance requirements and how they affect your account

Many money market accounts require a minimum opening balance—often $2,500 to $10,000—though some online banks have no minimum. If your balance falls below the minimum, the bank may charge a monthly fee (typically $10 to $15) or close the account. A few banks waive the fee if you maintain a linked checking account or set up direct deposit.

The minimum balance requirement is separate from the amount you need to earn the advertised interest rate. Some banks offer a tiered structure: balances under $10,000 earn 3.50% APY, balances of $10,000 to $50,000 earn 4.00%, and balances above $50,000 earn 4.50%. Read the fine print to see whether your balance tier affects your rate.

FDIC insurance and what it covers

Money market accounts at banks are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, per bank. If the bank fails, the FDIC reimburses you for the full amount up to that limit. If you have multiple accounts at the same bank—a checking account, a savings account, and a money market account—they are all added together for insurance purposes. Only the total of $250,000 is covered.

At credit unions, the same protection comes from the National Credit Union Administration (NCUA). The coverage limit is also $250,000 per member, per credit union. If you want to insure more than $250,000, you can open accounts at different banks or credit unions, and each account gets its own $250,000 of coverage.

How money market accounts compare to savings accounts and CDs

A regular savings account usually has no withdrawal limit and no minimum balance, but pays a lower interest rate—often 0.01% to 1.00% APY. A money market account pays more interest (currently often 4% to 5% APY) but limits your withdrawals to six per month. If you need to access your money frequently, a savings account is simpler. If you want higher interest and can live with the withdrawal limit, a money market account wins.

A certificate of deposit (CD) locks your money away for a fixed term—three months, one year, five years—and pays a set interest rate that does not change. CDs often pay more than money market accounts, but you cannot withdraw the money early without paying a penalty. A money market account gives you flexibility: you can withdraw up to six times per month without penalty, and you can close the account anytime. Choose a CD if you know you will not need the money for a specific period. Choose a money market account if you want higher interest than savings but need occasional access.

How to open and manage a money market account

To open a money market account, visit a bank or credit union website or branch. You will need to provide your name, address, Social Security number, and initial deposit. Most banks let you open online in 10 to 15 minutes. Some require you to visit a branch in person or mail in a form. After opening, you can deposit money by direct deposit, wire transfer, or check deposit (mobile or in-person). You can withdraw by writing a check, using a debit card, or requesting a transfer to another account.

Track your withdrawals each month to stay under the limit. Many banks show your remaining withdrawals in your online account dashboard. Set a reminder if you tend to forget, or use the account only for deposits and planned withdrawals. If you need to withdraw more than six times in a month, move the money to a linked savings or checking account first, then withdraw from there.

Frequently Asked Questions

Can I use a debit card to withdraw from a money market account?

Most money market accounts come with a debit card, and debit card transactions usually do not count toward your six-withdrawal limit. However, some banks count them. Check your account agreement or call the bank to confirm what counts as a withdrawal at your institution.

What happens if I go below the minimum balance?

If your balance drops below the minimum, the bank typically charges a monthly fee of $10 to $15 until you bring it back up. Some banks close the account if the balance stays low for several months. A few waive the fee if you maintain a linked checking account or receive direct deposit.

Can I move money from a money market account to a checking account without it counting as a withdrawal?

Transfers between your own accounts at the same bank usually count as one withdrawal. If you transfer to an account at a different bank, it also counts as a withdrawal. Some banks count transfers differently than checks or debit card use, so ask your bank about its specific rules.

Is the interest rate may provide to stay the same?

No. Money market account rates are variable, meaning the bank can change them at any time. Banks typically lower rates when the Federal Reserve cuts rates and raise them when the Fed raises rates. Your rate may change monthly, weekly, or even daily depending on market conditions.

What is the difference between APY and APR on a money market account?

APY (annual percentage yield) includes the effect of compounding and shows what you will actually earn over a year. APR (annual percentage rate) does not include compounding. Money market accounts are advertised using APY, which is the number that matters for comparing accounts.