A money market account is a hybrid between a savings account and a checking account, held at a bank or credit union
A money market account (MMA) combines features you recognize from both savings and checking accounts. You get a debit card and check-writing ability like a checking account, but your money earns interest like a savings account. The tradeoff is that banks limit how many withdrawals you can make each month—typically six—and they require a higher opening deposit than a regular savings account.
The interest rate on an MMA is usually higher than what you'd earn in a standard savings account, but lower than what you might get from a certificate of deposit (CD). Banks use your deposited money to make loans, and they pay you a portion of what they earn. The rate changes based on what the Federal Reserve does with interest rates, so your earnings go up and down over time.
Money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC) at banks or the National Credit Union Administration (NCUA) at credit unions, up to $250,000 per account holder per institution. That means your money is protected if the bank fails.
Key Takeaways
- A money market account earns interest and includes a debit card and limited check-writing, but restricts you to about six withdrawals per month.
- Interest rates on MMAs are higher than regular savings accounts but fluctuate with Federal Reserve rate changes.
- You typically need a larger opening deposit—often $2,500 to $10,000—than you would for a checking or savings account.
- Exceeding your monthly withdrawal limit usually triggers a fee or conversion to a regular savings account, so tracking your transactions matters.
How the withdrawal limit actually works
Federal rules once capped MMA withdrawals at six per month, but that rule was suspended in 2020. However, individual banks and credit unions still enforce their own limits—most still cap you at six. Some institutions have raised the limit to ten or removed it entirely, but you need to check your specific account agreement.
The limit applies to withdrawals, not deposits. You can deposit money as often as you want. Withdrawals include transfers to another account, checks you write, debit card transactions, and ATM withdrawals. Some banks count phone or online transfers differently, so read the fine print on your account terms.
If you exceed the limit, the bank typically charges a fee per excess transaction—usually $10 to $25 each. Some banks convert your account to a regular savings account instead, which means you lose the debit card and check-writing privileges. Either way, going over the limit costs you money or convenience.
Interest rates and how they change
The interest rate on an MMA is variable, meaning it moves when the Federal Reserve changes its benchmark rate. When the Fed raises rates, banks raise MMA rates. When the Fed cuts rates, MMA rates fall. This happens within days or weeks, not months.
Different banks offer different rates on the same day. A bank offering 4.50% APY (annual percentage yield) and one offering 4.00% APY are both legitimate—they simply have different business models and deposit volumes. Online banks and credit unions often offer higher rates than brick-and-mortar banks because they have lower overhead costs.
The APY you see advertised is the rate you earn if you keep the money in the account for a full year without touching it. If you withdraw money partway through the year, your actual earnings will be lower because the interest compounds daily on a smaller balance.
Minimum deposit and account fees
Most banks require an opening deposit of $2,500 to $10,000 to open an MMA. Some online banks have lowered this to $1,000 or even $0, but they are the exception. Credit unions sometimes have lower minimums if you are a member, but membership itself may have requirements.
Beyond the opening deposit, banks may charge a monthly maintenance fee if your balance falls below a certain threshold—often $2,500 or $5,000. Some waive the fee if you set up direct deposit or maintain a linked checking account. Others charge the fee regardless. A few banks charge no monthly fee at all.
You may also face fees for excess withdrawals, overdrafts, or closing the account within a certain timeframe. Some banks charge $25 to $50 if you close an MMA within six months of opening it. Read the fee schedule before you open the account.
When an MMA makes sense versus other accounts
An MMA works well if you want to earn interest on money you need occasional access to, but not constant access. If you make more than six withdrawals a month, a regular savings account or checking account is better—you will not face penalties. If you rarely touch the money, a CD locks in a higher rate for a set term.
An MMA also makes sense if you want one account that does multiple things: earn interest, write checks, and use a debit card. A regular savings account earns interest but has no debit card. A checking account has a debit card but earns little or no interest. An MMA splits the difference.
The tradeoff is that the withdrawal limit and higher minimum deposit make an MMA less flexible than a checking account. If you are building an emergency fund and need to pull money out unpredictably, a high-yield savings account with no withdrawal limit and no minimum deposit is often the better choice, even if the rate is slightly lower.
How to compare MMAs across banks
Start by listing the things that matter to you: the interest rate, the minimum opening deposit, the monthly maintenance fee, the withdrawal limit, and whether you want a physical branch or online-only access. Then check three to five banks or credit unions and write down their numbers in a spreadsheet.
Do not choose based on rate alone. A bank offering 4.75% APY with a $10,000 minimum and a $15 monthly fee may cost you more than a bank offering 4.50% APY with a $1,000 minimum and no fee, depending on how much you deposit and how long you keep the account open. Calculate the actual dollars you will earn and pay over a year.
Check whether the rate is promotional or permanent. Some banks offer a high rate for the first three months, then drop it. The account agreement will say whether the rate is introductory. Also confirm that the bank or credit union is FDIC or NCUA insured—this is non-negotiable.
Moving money into and out of an MMA
You can fund an MMA with a check, a wire transfer, or an ACH transfer from another bank account. Most banks process ACH transfers within one to three business days. Wire transfers are faster—usually same day—but may cost $15 to $30. Checks take five to seven business days to clear.
Once the money is in the account, you can withdraw it by writing a check, using the debit card, transferring it online, or visiting a branch (if the bank has physical locations). Remember that you are limited to about six of these transactions per month, so plan accordingly if you need the money for regular expenses.
If you need to move money out frequently, set up a linked checking account at the same bank. Transfer money from the MMA to checking once a month, then use the checking account for daily spending. This way, you stay within the MMA withdrawal limit and keep earning interest on the bulk of your money.
Frequently Asked Questions
Can I use my MMA debit card as much as I want without hitting the withdrawal limit?
No. Most banks count debit card transactions as withdrawals for the purposes of the monthly limit. If your account allows six withdrawals and you use the debit card four times, you have two withdrawals left for the month. Check your account agreement to confirm how your bank counts debit card use.
What happens if I go over the withdrawal limit?
The bank charges a fee per excess transaction—typically $10 to $25—or converts your account to a regular savings account, which removes your debit card and check-writing ability. Some banks do both. The fee hits your account immediately, so your balance drops.
Is the interest rate may provide to stay the same?
No. MMA rates are variable and change when the Federal Reserve adjusts its benchmark rate. Your bank will notify you of rate changes, usually by email or mail. The rate can go up or down, and there is no minimum rate the bank must maintain.
Can I open an MMA if I have bad credit?
Most banks do not check your credit score to open a savings or money market account. They may check ChexSystems, a banking history database, to see if you have had problems with past accounts. If you have been flagged for fraud or unpaid overdrafts, some banks may deny you, but credit score alone does not disqualify you.
Is an MMA better than a high-yield savings account?
It depends on your needs. An MMA offers a debit card and check-writing, but limits your withdrawals. A high-yield savings account usually has no withdrawal limit and no minimum deposit, but no debit card. If you need frequent access to your money, a high-yield savings account is simpler. If you want to earn interest and occasionally write checks, an MMA works.