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What is a Money Market Account (MMA)?
A **Money Market Account (MMA)** is a type of high-yield savings account offered by banks and credit unions. It combines features of both savings and checking accounts. MMAs typically offer a higher interest rate (APY) than traditional savings accounts, but they also provide easier access to your funds through checks or a debit card.
However, this flexibility often comes with restrictions, such as a limited number of withdrawals or transfers per month (often six) and a higher minimum balance requirement to avoid monthly fees or to earn the advertised APY.
Money Market vs. Savings vs. CDs
| Feature | Money Market Account | High-Yield Savings | Certificate of Deposit (CD) |
|---|---|---|---|
| Interest Rate (APY) | Good, often tiered | Good, often higher than MMA | Highest, but fixed |
| Liquidity / Access | High (Checks, Debit Card) | High (Transfers) | Very Low (Locked-in) |
| Withdrawal Limits | Yes (Typically 6/month) | Yes (Typically 6/month) | Penalty for early withdrawal |
| Minimum Balance | Often high to avoid fees | Often low or none | Fixed deposit amount |
How to Use the Money Market Calculator
- Initial Deposit: Enter the amount you will use to open the account.
- Monthly Contribution: Input any additional amount you plan to deposit each month.
- APY (%): Enter the Annual Percentage Yield for the account. This rate is typically variable.
- Time Period: Specify how many years you plan to save.
- Calculate: See the projected future balance and the total interest earned over the period.
Frequently Asked Questions (FAQ)
Is a Money Market Account safe?
Yes, just like regular savings and checking accounts, Money Market Accounts at FDIC-insured banks or NCUA-insured credit unions are protected up to $250,000 per depositor.
Is the interest rate on an MMA fixed?
No, unlike most CDs, the interest rate on a Money Market Account is **variable**. This means the rate can change over time, going up or down based on the federal funds rate and market conditions.