The Seacoast BankNote

How Does a Money Market Account (MMA) Work?

When it comes to saving money, roughly 71% of the U.S. population has a savings account at a bank or credit union, and it’s easy to see why. Savings accounts are a dependable, low-risk way to save for future goals while still earning a nominal return on the account balance.

Though many consumers may see savings accounts as a one-size-fits-all solution, Woman with tablet at home there are multiple account types designed to fit various savings needs. If you’re looking for a low-risk savings option that combines attributes of a checking account with the earning potential of a certificate of deposit (CD), a money market account (MMA) could be a great solution.  

What is a Money Market Account?

A money market account is an interest-bearing deposit savings account typically offering check-writing or debit card withdrawal privileges. Money market accounts usually offer a higher interest rate than traditional savings accounts and feature a tiered-rate structure, which means the higher the account balance, the greater earning potential. 

Like other deposit accounts, money market accounts are considered low-risk and are insured up to the allowable limits by the FDIC or NCUA. 

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What Can a Money Market Account Be Used For?

A money market account’s flexibility and accelerated savings potential make them attractive options for shorter-term savings goals, such as planning a big vacation, setting aside tax payments or upgrading home appliances. 

For example, let’s say you’re saving for a big family vacation.
If you open a money market account with $2,000 and commit to depositing an additional $200 each month for two years at a 2.5% interest rate, you will have earned approximately $226.81 in interest alone. Your deposits, or money you contributed, would amount to $6,800 and bring your total balance to $7,026.81. The interest earned alone could be used to upgrade your lodging or splurge on additional activities. 

The same benefits that make money market accounts so attractive to consumers also make them a potentially great option for business owners looking to manage their cash flow and save for business expenses.

Considerations Before Opening a Money Market Account

Money market accounts can typically be opened online within minutes or in person at a branch, but before you do, it’s worth doing a little research to ensure you’re getting the most out of your account. Some key considerations include the following:

  • Research rates to ensure you’re getting a competitive return on your investment
  • Consider account details, such as the minimum opening deposit amount, average daily balance requirement, and potential fees around statements or exceeding withdrawal limits
  • Check whether the MMA can be linked to personal checking as a companion account and used for overdraft protection
  • If you have multiple accounts at the same bank, check to ensure the MMA can be added to online and mobile banking, which will make transfers and deposits simpler
  • Ensure the bank where you open the MMA has NCUA or FDIC insurance

Is a Money Market Account Right for You? 

Money market accounts can be a fantastic option for consumers looking to speed up their earnings while still having quick access to funds. Like other deposit accounts, they’re considered low-risk, and funds are federally insured up to the allowable limits. As with any deposit account, conduct thorough research before opening to ensure it aligns with your financial goals.

If you have additional questions about money market accounts, our team of local bankers is happy to help. Find your nearest branch or open your account online today.


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