A farmer’s market full of juicy money bags instead of tomatoes. That’s what comes to mind when I hear “Money Market Account.” While you won’t find produce within this fresh savings option, it can produce financial growth packed with potential. Grab your tote bag and get ready to harvest some delicious earnings!
What is a Money Market Account?
Imagine if a savings account and a checking account had a baby. You’d get a money market account, also known as an MMA. (No, not the cage-fighting MMA!)
Offered by banks and credit unions, MMAs are deposit accounts, meaning they allow both deposits and withdrawals, similar to other deposit accounts like savings accounts, checking accounts, and certificates of deposit (CDs). What makes MMAs unique is their interest rates and access to funds, also known as liquidity.
Like savings accounts, deposited money grows and earns interest over time, but MMAs offer higher interest rates than traditional savings accounts.
Like a checking account, MMAs typically have access to deposited money through checks and debit cards, but MMAs often have limitations on withdrawals.
Money Market Account Pros
- Higher interest rate
- Low-risk monetary growth
- Accessible funds
- Debit cards and check writing
- Insured by the NCUA up to $250,000
When you deposit money into an MMA, there’s security for both you and the financial institution. The credit union or bank uses MMA money to invest in low-risk treasury bills or certificates of deposit, enabling them to offer higher interest rates. The higher the rate, the more money in your pocket.
Additionally, since MMAs are standard deposit accounts, they are insured by the National Credit Union Administration (NCUA) up to $250,000 per depositor at credit unions.
Your funds are growing in a secure account at an interest rate that isn’t subject to factors like never-ending fluctuations in the stock market. This makes MMAs a low-risk growth opportunity.
When it comes to withdrawing money from your MMA, you’ve got options. Many accounts offer debit cards and check-writing capabilities, meaning easy access to funds when you need them.
Overall, MMAs offer accelerated fund growth with flexible access to funds that make them an attractive deposit account option, especially when saving for larger expenses such as:
- Emergency funds
- Travel
- College tuition
- Business startups
Money Market Account Cons
- Higher minimum balance requirements
- Withdrawal limits
- Lower interest rates than investment accounts
- Variable interest rates
MMAs have higher minimum balance requirements, which set the bar for how much savings you need to open an account. The required minimum varies by financial institution due to factors such as account maintenance, market competition, and transaction management. If your balance drops below this minimum, you may be charged a monthly fee, so make sure you’re prepared to maintain and work towards exceeding that balance.
Additionally, MMAs are built for saving, not for frequent transactions. That’s why many financial institutions may charge fees and limit monthly withdrawals. Therefore, you have to consider how accessible you want your funds to be. For example, a limit of two monthly withdrawals may be no big deal or a major deal-breaker. On the other hand, those who struggle to stick to their savings goals may benefit from fewer withdrawals, helping them resist the urge to spend. It’s all a matter of preference, and not all MMAs are designed the same way.
Let’s talk rates. As mentioned earlier, MMA rates tend to outpace traditional savings accounts, but may fall short in comparison to high-yield savings accounts or investment accounts. In addition, MMA rates are variable, meaning they are subject to change and can alter how much interest you earn.
With so many deposit account options, it often comes down to preferences with withdrawals, fees, rate fluctuation, and personal goals. Check out this quick comparison:
As you can see, money markets bridge the gap between savings accounts and checking accounts, with more flexibility than a CD.
Bang for Your Buck
Curious if an MMA makes that much of a difference in savings? Take a look at the difference in interest growth between an MMA and a savings account:
That’s a $322.99 difference in interest profit just by choosing a money market account over a traditional savings account. Same starting amount. Same deposits. Same time. But MMAs come out on top with significantly more growth. That’s the power of interest rates, baby!
Money Market Plus
Interested in a money market account? We’ve got an even better option! 1166 Federal Credit Union recently launched Money Market Plus, our latest money market account opportunity at our highest money market rate and lowest required minimum deposit.
- 3.00% Annual Percentage Yield (APY*)
- 2 free withdrawals monthly***
- Minimum deposit of $2,500 to earn APY
Money Market Plus accounts are only available for new money, or funds that have not been on deposit with 1166 Federal Credit Union in the last 30 days.***
Learn more about our money market accounts, and contact us today to get started!
Disclaimers:
*APY = Annual Percentage Yield. 3.00% APY is accurate as of July 28, 2025, and subject to change at any time.
**Up to two free withdrawals per month without penalty, with additional withdrawals incurring a $25 charge per occurrence. Penalty fees may reduce earnings.
*** Transfers from existing 1166 FCU accounts alone do not qualify.
