A money market account blends savings-style interest with some checking-style access, but it usually comes with higher minimums. Here is what to compare before you open one.
In a nutshell
- A money market deposit account is a bank or credit union account that pays interest and often allows checks or a debit card, unlike most savings accounts.
- Rates are often tiered, so the best annual percentage yield may require a minimum balance, sometimes between $1,000 and $25,000.
- Money market accounts are FDIC- or NCUA-insured up to $250,000 per depositor, per insured bank, for each ownership category.
- A money market mutual fund is an investment product, not a deposit account, and is not insured by the FDIC or NCUA.
- There is no federal limit on the number of withdrawals, so each bank sets its own transaction rules, which you should read before opening.
A money market account is a deposit account that tries to do two jobs at once: earn interest like a savings account and offer some of the access of a checking account. Banks and credit unions offer them, and they tend to pay higher rates than basic checking while allowing more ways to reach your money than a standard savings account. The trade-offs show up in the minimum balances, the fine print on withdrawals and the confusion with a similarly named investment product. This guide walks through what these accounts are, how the rates work and what to check before you commit.
What a Money Market Deposit Account Is
A money market deposit account, sometimes called a money market account or money market savings account, is a deposit product offered by banks and credit unions. Deposit simply means the money you place there is held by the institution rather than invested in securities. The FDIC groups money market accounts alongside savings accounts, checking accounts and certificates of deposit as the common deposit account types.
Compared with a traditional checking account, a money market account generally pays a higher rate of interest. Compared with a traditional savings account, it generally offers more ways to access your money, such as checks or a debit card. Unlike a certificate of deposit, which locks your money for a set term, there is no requirement to keep funds in the account for a designated period. You can add to it and withdraw from it, subject to the account’s own rules.
That combination makes the account type a candidate for money you want available but not constantly in motion, such as an emergency fund. If you are still sorting out which account does which job, our comparison of checking versus savings accounts covers how the two differ in purpose.
Tiered Rates and Minimum Balances
The headline number to compare is the annual percentage yield, or APY. That is the yearly rate of return on your deposit, expressed so that accounts with different compounding methods can be compared on equal footing. Federal Truth in Savings rules require banks and credit unions to disclose fees, the interest rate and the APY for deposit accounts, so the figures should appear in any account disclosure you receive.
Many money market accounts use tiered rates. That means the APY you earn depends on your balance. Larger balances often earn higher rates, so the best advertised APY may apply only once your balance clears a threshold, which can range from $1,000 to $25,000 depending on the institution. Rate structures differ widely from one bank or credit union to the next, which is one more reason the disclosure, not the advertisement, deserves your attention.
Minimums cut two ways. Many money market accounts require a higher initial deposit and a higher ongoing minimum balance than other savings options. Falling below the minimum can mean a lower rate, a monthly fee or both. Because recurring charges are a common way accounts erode their own interest earnings, our article on monthly maintenance fees explains how these charges work and how they are often waived.
Access to Your Money: Checks, Cards and Transfers
Access rules are where money market accounts differ most from plain savings accounts. Many come with check-writing privileges or a debit card, though not all do, so confirm the features before assuming. Transactions by check, debit card or electronic transfer may be limited to a set number per month. Withdrawals at an ATM, in person, by mail or by telephone are usually unlimited.
There is no federal cap on the number of withdrawals for these accounts, so each bank sets its own policy. That makes the disclosure worth reading closely: the number of free transactions, the fee for exceeding it and any hold times on transfers all vary by institution.
The practical question is what you actually need. If you expect to move money out a few times a month, the access features help. If you want to leave the balance alone, a simpler savings account may earn a comparable rate without the management overhead.
Money Market Account vs. Money Market Fund
The names are nearly identical, and that is the problem. A money market mutual fund is an investment product sold by brokerage firms and fund companies, not a deposit account. It pools investors’ money to buy short-term, high-quality debt such as Treasury securities, certificates of deposit and commercial paper. Some funds even allow check-writing, which deepens the resemblance.
The differences that matter:
- Regulation. A money market account is a bank product. A money market fund follows securities regulation, even when the fund company shares a name with a bank.
- Insurance. Money market funds are not insured by the FDIC or NCUA. A fund seeks to preserve a net asset value of $1.00 per share, but that value is not guaranteed by any government agency. Brokerage customers may have coverage through the Securities Investor Protection Corporation, or SIPC, if the brokerage firm fails, which is a different kind of protection.
- Costs and risk. Funds carry investment expenses and market risk. Deposit accounts do not.
Do this
If a product is described as a “money market” anything, ask one question first: is this a deposit account or an investment? The insurance coverage depends entirely on the answer.
| Feature | Money market account | Savings account | Money market fund |
|---|---|---|---|
| What it is | Deposit account at a bank or credit union | Deposit account at a bank or credit union | Investment product from a brokerage or fund company |
| Federal deposit insurance | Yes, FDIC or NCUA | Yes, FDIC or NCUA | No; SIPC may apply at a failed brokerage |
| Checks or debit card | Often, but not always | Generally not | Sometimes |
| Minimums | Often higher than savings | Varies widely | Set by the fund company |
Insurance Coverage and Where to Verify It
Money market deposit accounts are covered by federal deposit insurance. At FDIC-insured banks, deposits are insured to at least $250,000 per depositor, per insured bank, for each account ownership category. Since the FDIC was founded in 1933, no depositor has lost FDIC-insured funds in a bank failure. Accounts at credit unions are insured in a similar way by the National Credit Union Administration, the NCUA.
The limit is per institution and per ownership category, not per account. Your single-owner money market account and your jointly owned accounts at the same bank are insured separately, up to $250,000 each in their categories, but two accounts of the same type at one bank are added together. If you hold several accounts at one institution, ask the bank or credit union to confirm your total coverage.
Verification tools exist for exactly this purpose. The FDIC’s BankFind Suite confirms whether a bank is insured, and the FDIC’s Electronic Deposit Insurance Estimator lets you model your coverage; you can also call the FDIC at (877) 275-3342. The NCUA offers its own web tool for credit union accounts. For how the coverage works in detail, our explainer on FDIC insurance walks through the limits and categories.
Questions to Ask Before Opening One
Bring the account disclosure with you and work through these questions:
- What is the minimum deposit to open, and the minimum balance to avoid fees or keep the top rate?
- How many tiers does the rate structure have, and which tier applies to your expected balance?
- Does the account actually include checks or a debit card, and how many transactions per month are free?
- What fees apply, including charges for going below the minimum or exceeding transaction limits?
- Is the institution FDIC- or NCUA-insured, and have you confirmed it with the official tool?
One small first step: request the account disclosures from two or three institutions you are considering, and compare only three lines, the APY at your realistic balance, the minimum balance required to earn it and the monthly fee. That side-by-side comparison will tell you more than any advertised rate, and it is the same comparison we suggest starting with in our guide to what you need to open a bank account.
Good questions
Is a money market account the same as a money market fund?
No. A money market account is a deposit account at a bank or credit union that is insured by the FDIC or NCUA. A money market mutual fund is an investment sold through brokerage firms and fund companies, and it is not FDIC- or NCUA-insured.
Can I write checks from a money market account?
Many money market accounts offer check-writing and debit card access, though not all do. The bank may also limit the number of transactions by check, debit card or electronic transfer each month, so read the account terms carefully.
Are money market accounts safe?
Deposits at FDIC-insured banks and NCUA-insured credit unions are covered up to $250,000 per depositor, per institution, for each account ownership category. Verify the institution’s insured status before opening an account.
Why does a money market account pay more than a regular savings account?
It often does not pay more; rates can be similar. The trade-off usually runs the other way: money market accounts tend to require higher minimum balances to open and to earn the top advertised rate.
This guide is general information, not financial or legal advice. Bank fees, account terms and screening policies vary by bank and change over time, so check the account’s fee schedule and terms before you open it. For federal rules, see the Consumer Financial Protection Bureau and the FDIC.