Money Market Deposit Accounts

A money market deposit account is a high-interest savings account that also bears some resemblance to a checking account. If you have enough cash to open it, it can be a useful savings tool that allows you to restrict access to your funds while still generating more interest than a traditional savings account.

Money market deposit accounts combine some of the best features of both checking and savings accounts, but each type of account has its own pros and cons. When you get certain features when opening these types of accounts, you may have to opt-out of some others. Learn more about how money market deposit accounts work and when you might need them in Woburn, MA.

What is a money market deposit account?

A money market deposit account is essentially a savings account that has some of the properties of a checking account. Typically, you receive checks or a debit card, and you can make several transactions each month, but you will not have complete freedom, as in the case with a typical checking account. There are also several key differences between money market deposit accounts and traditional savings accounts, including higher minimum deposit requirements and better interest rates on money market deposit accounts.

Important: With a money market deposit account, you will generally be able to write a limited number of checks, as opposed to a traditional checking account.

How does a money market deposit account work?

Many banks and credit unions offer money market deposit account options that can be opened in person or online. To open such an account, you usually need a large minimum deposit, often starting at $10,000. Most banks will charge you a commission if your account balance falls below this amount. If your bank provides checks for your money market deposit account, it will provide you with them along with other account documents detailing conditions such as the maximum number of transactions per month.

Your Account Terms will also show your Annual Percentage Return (APR), which is the rate at which cumulative interest will be accrued on your ARRP during the year. So, for example, if you put $10,000 on the money market deposit account with a 0.5% GPA on January 1 and don’t add more money, you will have $10,050 by the end of the year.

While you are banking with an FDIC (Federal Deposit Insurance Corporation) or NCUSIF (National Unity Unit Insurance) insured institution, your money market deposit account combined with any other bank account balances in the same institution will be insured up to a total of $250,000 for a single owner’s account or $500,000 for a joint account.

Pros and cons of money market deposit accounts



Explanation of pros

Money market deposit accounts offer some key benefits that make them an attractive store of savings for people looking to start saving their money.

Explanation of cons

Money market deposit accounts have some nice features, but you should be aware of a few shortcomings before opening an account.

Warning: Do not confuse these accounts with money market mutual funds, which play a role in investment planning but are not the same financial instrument. Money market mutual funds are not insured by the federal government.

Best use cases for money market deposit accounts

A money market deposit account is a great place to deposit money that you may need in the relatively near future. They allow you to make a small profit while keeping funds safe and affordable. They are especially useful for large and infrequent expenses such as:

A money market escrow account is not the best place to store funds for recurring expenses due to the limits on the number of check payments you can make. However, in order to earn a little more interest, you could keep the funds in a money market deposit account for some of your biggest monthly expenses, such as a mortgage.

If you don’t need immediate access to your cash, you can look into higher-yielding deposit accounts. You can even use the deposit account series known as the deposit account ladder to make decent profits while keeping some of your money liquid and minimizing early withdrawal penalties. If you are investing for the long term, talk to a financial planner about which combination of investments can best help you achieve your goals.


Best money market rates & accounts