What Is a Money Market Account?
A money market account is a type of deposit account at a bank or credit union. It pays interest on your balance — typically more than a standard savings account — and is FDIC-insured up to $250,000. Historically, MMAs required higher minimum balances than savings accounts and offered slightly better rates in exchange.
One feature that distinguishes MMAs from savings accounts: they often come with limited cheque-writing privileges and sometimes a debit card, giving them a bit more accessibility than a pure savings account. This makes them a middle ground between a checking account and a savings account.
MMA vs High-Yield Savings Account
| Feature | Money Market Account | High-Yield Savings Account |
|---|---|---|
| Typical APY (May 2026) | 4.50–5.25% | 4.50–5.10% |
| Minimum balance | Often $1,000–$25,000 for top rate | Usually $0 |
| Monthly fees | Common if below minimum | Usually none |
| Cheque-writing | Often yes (limited) | Usually no |
| Debit card | Sometimes | Rarely |
| FDIC insured | Yes ($250k limit) | Yes ($250k limit) |
| Best when | You have a large balance and want cheque access | You want the highest rate with no minimum and no fees |
APY figures as of May 2026. Rates vary by institution. Source: FDIC national rate averages and individual bank surveys.
The practical difference between a competitive MMA and a competitive HYSA has narrowed significantly in recent years, particularly as online banks pushed HYSA rates higher. The rate gap that once favoured MMAs has largely closed. What remains is the minimum balance requirement — if you can maintain the minimum, an MMA's cheque access can be a useful feature for occasional large payments.
Money Market Account vs Money Market Fund — Important Distinction
This is a common source of confusion that can have real financial consequences.
A money market account (MMA) is a bank deposit product. It's FDIC-insured. Your principal is protected. It pays interest at a variable rate.
A money market fund is an investment product — a type of mutual fund that invests in short-term, high-quality debt securities (Treasury bills, short-term corporate paper). It's held at a brokerage, not a bank. It is not FDIC-insured. Although money market funds are generally very stable and rarely "break the buck" (fall below $1 per share), it has happened — notably during the 2008 financial crisis. They're covered by SIPC in case the brokerage fails, but SIPC protection doesn't protect against investment losses.
During the 2008 financial crisis, the Reserve Primary Fund — a major money market fund — "broke the buck" and its net asset value fell below $1 per share, triggering a broader panic in the money market fund sector. The SEC subsequently implemented reforms requiring funds to maintain higher liquidity buffers. Bank money market accounts were unaffected — their FDIC coverage meant no depositors lost money.
When a Money Market Account Makes Sense
An MMA is a better choice in a few specific situations:
- You have a large balance and can easily meet the minimum. If a bank's MMA requires $25,000 minimum and pays 0.25% more than their HYSA, that's an extra $62.50 per year — not huge, but real.
- You occasionally write large cheques directly from savings. Paying a contractor or making a large purchase directly from your savings without first transferring to checking is easier with a money market account.
- Your bank's MMA is genuinely offering a higher rate. Always compare current APYs — sometimes an institution offers a promotional rate on MMAs. When the MMA rate meaningfully exceeds the HYSA rate, it's worth the higher minimum.
When a HYSA Makes More Sense
- You want no minimum balance requirement. Many of the best HYSAs have a $0 minimum. An MMA requiring $10,000 to avoid fees creates a burden and potential penalty if your balance dips.
- You're comparing rates and the HYSA matches or beats the MMA. Many online HYSAs currently pay 4.75–5.25% with no minimums — equal to or better than most MMAs.
- Simplicity matters. One high-yield savings account is simpler to manage than juggling accounts with minimums. For an emergency fund or short-term savings goal, simplicity wins.
Similar Products in the UK, India, and Canada
UK: The money market account as a distinct product category doesn't quite translate to the UK. The closest equivalents are notice accounts (you give 30–120 days' notice before withdrawing, in exchange for a higher rate) and easy-access accounts (equivalent to HYSAs — instant access, variable rate). For large deposits, some banks offer tiered rates where larger balances earn more. The FSCS covers up to £85,000 per institution regardless of product type.
India: Indian banks don't use the MMA terminology. The closest product is a high-balance savings account with tiered rates — some banks pay progressively higher interest on larger balances. For example, a bank might pay 3% on the first ₹1 lakh and 4.5% on balances above ₹1 lakh. Small finance banks offer the highest savings rates in India, often 6–7%, though with higher operating risk. Liquid mutual funds are widely used in India as a HYSA/MMA equivalent for larger sums — they invest in short-term debt and have historically offered returns slightly above savings accounts, with same-day redemption, though they carry minimal investment risk. SEBI regulates these at sebi.gov.in.
Canada: Canadian banks offer High-Interest Savings Accounts (HISAs) that function identically to US HYSAs. The money market account as a distinct product type is less common. EQ Bank, Oaken Financial, and Wealthsimple Cash are popular online options. Some Canadian investors use cash ETFs (like CASH, CSAV) held in a brokerage account as a near-equivalent — these invest in short-term instruments and currently yield around 4–4.5%, with same-day liquidity. These are investment products, not deposits, so CDIC coverage doesn't apply — they're covered differently. More at cdic.ca.