Money market account

This article is about the type of bank deposit account. For the type of mutual fund, see Money market fund.

A money market account (MMA) or money market deposit account (MMDA) is a financial account that pays interest based on current interest rates in the money markets.

Money market accounts typically have a relatively high rate of interest and require a higher minimum balance (anywhere from 1000 to 10,000 to 25,000 dollars) to earn interest or avoid monthly fees. The resulting investment strategy is therefore similar to, and meant to compete with, a money market fund offered by a brokerage. The two account types are otherwise unrelated.

United States

In the United States, an MMA is a deposit account that is considered a savings account for some purposes, but is an account upon which checks can typically be written (subject to certain restrictions). Like a Negotiable Order of Withdrawal account, it is structured to comply with Regulation Q, which forbids paying interest on checking accounts. Thus money market deposit accounts are accounts that bear interest, and on which checks can be written, but, due to various restrictions, are not legally checking accounts, and thus do not run afoul of Regulation Q.

Since the account is not considered a transaction account, it is subject to the regulations on savings accounts: only six withdrawal transactions to third parties are permitted per month.[1] Banks are required to discourage customers from exceeding these limits, either by imposing high fees on customers who do so, or by closing their accounts. Banks are free to impose additional restrictions (for instance: some banks limit their customers to six total transactions). ATM transactions may or may not be counted.

External links

• Money Market Funds Enter a World of Risk September 18, 2008, New York Times