What is a Money Market Account (MMA)?

Published by Thomas Herold in Banking, Investments, Laws & Regulations

'Money Market Account (MMA)' is explained in detail and with examples in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Money Market Account refers to a type of savings account which commonly includes advantages such as a debit card and check writing privileges. Besides this, it usually has interest rates which are higher than those which normal savings accounts provide. Such money markets generally have a higher minimum account balance than the average savings accounts do. These accounts are sometimes referred to by their acronym of MMA.

For those individuals who are contemplating a safe depository vehicle for bigger sums of cash and who wish to earn some interest while keeping the funds entirely liquid, these money market accounts can be an optimal solution. Among their pros are that the balance funds are available without advance notice, that they earn a relatively higher interest rate, that they provide the capability of writing as many as six checks each month, and that the debit card attached to them can be utilized as many as six times every month.

For any person who is going to place at least a few thousand dollars into a bank account and desires the clear cut safety provided by the FDIC Federal Deposit Insurance Corporation guarantee of funds, these can be a solid choice. Both credit unions and banks offer them as a reliable place to keep customers’ emergency day purpose funds. The money is kept segregated from an account holder’s daily utilization checking account funds this way. It can grow quicker than money kept in a comparable savings account thanks to the higher interest rate commonly attached to these MMAs. They provide the added convenience of check writing, which allows for easily covering any unexpected or emergency expenses.

Yet these accounts should not be confused with either checking or savings accounts. In fact they have stark differences from either of the two competing types. For starters, MMAs are not at all checking accounts. They may include the debit card maximum use feature or limited check writing privileges. Yet as with a savings account, they are Federal Reserve-regulation limited to maximum of six monthly withdrawals or transfers in a given month. This includes transactions made by check, debit card, or online/in person transfer. For those individuals who will need more than these half a dozen uses, interest bearing checking accounts make more practical sense than do money market accounts.

Besides this MMAs are similarly not strictly savings accounts either because of their debit cards and check writing capabilities. For those people who do not feel the need of having checks or even the debit card convenience with the account, there are sometimes better interest rates on balances available through what are known as high yield online savings accounts.

One of these types is the CD or certificate of deposit. Cd’s may require that the owners agree to tie up their funds for as little as from months to as long as for years. MMAs will certainly permit more convenient and immediate time framed withdrawals than this. Yet CDs will pay better rates for those who can afford to lock it down for some time.

Finally, such money market accounts should not be confused with money market funds. The latter are instead investments whose principal value will decline if the market plunges. All MMAs carry the full FDIC backing when they are operated by banks, and by the NCUA National Credit Union Administration when they are held at credit unions. This amount of protection is equal to $250,000 per depositor or account.

For those individuals who decide that money market accounts are well suited for them, the best policy is to pursue those that come without any associated monthly fees and that pay the highest possible interest rates. It is also critical to ensure that they do not require too high a minimum account balance. This is critical to pay attention to since some financial institutions mandate that depositors open the account with and maintain a $10,000 account balance for these MMAs.

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The term 'Money Market Account (MMA)' is included in the Laws & Regulations edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.