A money market account is a hybrid savings product that combines features of checking and savings accounts
A money market account (MMA) is a deposit account offered by banks and credit unions. It pays interest on your balance, like a savings account does, but it also lets you write checks or make debit card transfers, like a checking account does. The tradeoff is that the bank limits how many withdrawals you can make each month—typically six—and requires a higher opening balance than a regular savings account.
The interest rate on a money market account is usually higher than what you'd earn in a standard savings account, but lower than what you might earn in a certificate of deposit (CD). The rate changes based on what the Federal Reserve does with interest rates and what the bank decides to offer. Some banks pay more competitive rates than others, so it's worth comparing before you open one.
Key Takeaways
- Money market accounts pay interest and allow limited check-writing or transfers, making them useful for money you want to access occasionally but not constantly.
- Federal rules cap withdrawals at six per month; exceeding this limit can result in fees or account closure, though some banks enforce this less strictly than others.
- Interest rates on money market accounts vary by bank and change with market conditions, so rates at one institution may be significantly higher than at another.
- You need a higher minimum balance to open a money market account than a savings account, often $2,500 to $25,000 depending on the bank.
How the withdrawal limit works in practice
Federal Regulation D historically limited money market account withdrawals to six per month. This rule was relaxed during the pandemic, and banks now handle it differently. Some banks still enforce the six-withdrawal cap strictly and charge a fee if you exceed it. Others have removed the limit entirely or raised it to ten or more. A few charge a fee only if you go over, rather than closing your account.
The limit applies to transfers and checks you initiate, not to deposits or ATM withdrawals at the bank's own machines. If you need to move money out frequently—say, more than six times a month—a money market account is not the right tool. A regular checking account with no withdrawal limits would serve you better.
Interest rates and how they compare
Money market account rates sit in the middle of the interest-earning spectrum. A high-yield savings account might pay 4.5% to 5.35% annually (rates vary and change regularly). A money market account at the same bank might pay 4.2% to 5.0%. A traditional savings account might pay 0.01% to 0.5%. A CD locked in for one year might pay 5.0% to 5.5%, but you cannot touch the money without a penalty.
The rate you receive depends on the bank's current offer, the size of your balance, and the overall interest rate environment. Online banks and credit unions often pay higher rates than large national banks. Before opening an account, check the current rate and ask whether it is a promotional rate that will drop after a few months, or a standard rate that stays the same.
Minimum balance requirements and fees
Most banks require you to maintain a minimum balance to open a money market account and to keep the account open without paying a monthly fee. This minimum ranges widely—from $2,500 at some online banks to $25,000 or more at large national banks. If your balance drops below the minimum, you may face a monthly maintenance fee of $10 to $25.
Some banks also charge a fee if you exceed your monthly withdrawal limit, typically $25 per excess withdrawal. A few charge a fee to close the account early. Read the account agreement before you open it so you know what fees apply and what balance you need to maintain.
When a money market account makes sense
A money market account works well if you have money you want to earn interest on but may need to access a few times a month—not constantly, and not locked away for months. Common uses include holding an emergency fund, saving for a down payment over several months, or keeping a buffer for irregular expenses like car repairs or medical bills.
It does not work well if you need to move money in and out more than six times a month, if you cannot maintain the minimum balance, or if you want the highest possible interest rate. In those cases, a high-yield savings account (no withdrawal limits, similar rates), a regular checking account (unlimited access, lower or no interest), or a CD (highest rates, money locked in) would be a better fit.
Money market accounts versus similar products
| Account Type | Interest Rate | Withdrawal Limit | Minimum Balance | Best For |
|---|---|---|---|---|
| Money Market Account | 4.0%–5.5% (varies) | Usually 6 per month | $2,500–$25,000 | Occasional access, higher interest |
| High-Yield Savings | 4.5%–5.5% (varies) | None | $0–$25,000 | Frequent access, competitive rates |
| Regular Savings | 0.01%–0.5% | None | $0–$500 | Easy access, low barrier to entry |
| Certificate of Deposit (CD) | 5.0%–5.5% (varies) | None until maturity | $500–$25,000 | Money locked in for set term, highest rates |
FDIC protection and safety
Money held in a money market account at an FDIC-insured bank is protected up to $250,000 per depositor, per bank. If the bank fails, the FDIC covers your balance. Credit unions offer similar protection through the NCUA up to the same limit. This protection applies whether the account earns 0.01% or 5.5%—the insurance level does not change based on the rate.
If you have more than $250,000 to deposit, you can open accounts at multiple banks or use different account ownership categories (individual, joint, retirement) to stay within the insurance limit at each institution. The FDIC website has a calculator that shows you how much of your money is covered.
Frequently Asked Questions
Can I use a debit card with a money market account?
Some banks issue debit cards for money market accounts, but not all. If the bank does issue one, the debit card transactions count toward your monthly withdrawal limit. Check with your bank before opening the account if debit card access is important to you.
What happens if I exceed the six-withdrawal limit?
It depends on the bank. Some charge a fee per excess withdrawal (usually $25). Others may close the account or convert it to a checking account. A few no longer enforce the limit at all. Read your account agreement or call the bank to find out their specific policy.
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. Rates typically move up or down based on what the Federal Reserve does with interest rates. Some banks lower rates when the Fed cuts rates, and raise them when the Fed raises rates.
Can I open a money market account if I have bad credit?
Yes. Banks do not run a credit check to open a deposit account like a money market account. They may check ChexSystems (a banking history report) to see if you have had problems with past accounts, but a low credit score does not disqualify you.
What's the difference between a money market account and a money market fund?
A money market account is a bank deposit account insured by the FDIC. A money market fund is an investment product sold by brokerages that invests in short-term debt. They have similar names but are different products with different risks and protections. This guide covers the bank account version.