Key Takeaway
- Money market accounts (MMAs) are interest-earning deposit accounts
- They combine features of both savings and checking accounts
- Ideal for short- to mid-term savings goals
- Offer a balance of liquidity, capital preservation, and modest returns
When it comes to saving money, most people think of a regular savings account. But if you’re looking for a way to earn more interest without giving up easy access to your funds, a Money Market Account (MMA) could be the perfect middle ground.
In this article, we’ll explain what a money market account is, how it compares to a regular savings account, how FDIC insurance protects your deposits, and when an MMA might make the most sense for your financial goals.
1. What Is a Money Market Account?
A money market account is offered by banks and credit unions. Like a savings account, it allows you to earn interest on your balance. However, it may also provide limited check-writing abilities or debit access, depending on the institution.
Key features often include:
- Tiered interest rates, which may increase with higher balances
- May include limits on certain types of withdrawals or transfers, depending on bank policy
- Minimum balance requirements, which can be higher than a standard savings account
- FDIC or NCUA insurance, depending on the type of institution
While not designed for daily transactions, MMAs can serve as a flexible account for short- or mid-term savings.
2. Comparison: MMA vs. Regular Savings Account
Though similar in purpose, money market accounts and savings accounts differ in a few key ways:
| Feature | Money Market Account | Savings Account |
|---|---|---|
| Interest Rate | Often higher; may be tiered | Typically lower |
| Access | Include check-writing | Transfers only (no check-writing) |
| Minimum Balance | Often higher | Usually lower |
| Usage | Suitable for larger balances or planned expenses | Ideal for general savings needs |
Both types of accounts are intended for saving rather than spending, but MMAs may appeal to those who prioritize earning higher interest while maintaining some flexibility.
3. Is a Money Market Account FDIC Insured?
Yes, if held at an FDIC-member bank, a money market account is insured up to $250,000 per depositor, per ownership category. This coverage protects your deposit in the event of bank failure and applies to standard money market accounts.
For businesses with larger balances, seeking FDIC protection beyond that limit—some banks participate in programs like IntraFi’s Insured Cash Sweep (ICS), which can spread funds across multiple institutions while maintaining full FDIC insurance. These accounts are still deposit-based and retain daily liquidity, though they may have slightly different structures and disclosures.
It is important to distinguish money market accounts from money market mutual funds, which are investment products offered through brokerage firms. Money market funds are not FDIC insured and carry investment risk, while money market accounts are deposit products with principal protection.
4. When Might a Money Market Account Be Useful?
Money market accounts may be appropriate for savers who want:
- A place to hold funds for short- to medium-term goals (e.g., home purchase, tuition, travel)
- An account with limited withdrawal access for added discipline
- A way to separate emergency funds from daily-use checking accounts
- A savings vehicle that balances liquidity with modest interest earnings
They are not ideal for frequent transactions or for funds that need to always remain completely liquid.
5. Things to Consider
Before opening a money market account, consider:
Withdrawal limits
Regulation may restrict the number of outgoing transfers per month
Balance requirements
Some accounts may charge fees if the balance falls below a threshold
Interest rate structure
Rates may vary by institution and balance tier
Account purpose
Clarify your savings goals to determine whether an MMA or another type of account is more appropriate
Final Thoughts
A money market account can be a helpful tool for individuals and businesses who are looking to preserve capital while earning a modest return. It offers a combination of stability, accessibility, and interest earnings, making it suitable for a variety of financial needs.
To explore how a money market account might support your financial goals—whether for personal savings, business reserves, or large business deposit over $250,000—feel free to speak with a banker at one of our branches, call (626) 284-5555, or send us an inquiry form.
The information provided in this blog is for general informational purposes only and should not be considered legal, financial, or investment advice. All content is subject to change without notice. Please consult with a qualified professional or contact New Omni Bank directly for personalized guidance or the latest product information.
