An MMA account is a savings account that combines features of a money market account and a traditional savings account, with interest rates that move up and down based on market conditions.
MMA stands for money market account. Banks offer them as a middle ground between a regular savings account (which earns very little interest) and a certificate of deposit or CD (which locks your money away for a set time). With an MMA account, your money stays accessible, but the bank pays you more interest because you're agreeing to keep a higher minimum balance and limit how often you withdraw.
The interest rate on an MMA account is not fixed. It changes when the Federal Reserve adjusts its benchmark interest rate, which happens several times a year. When rates go up, your MMA account earns more. When rates fall, so does your interest. This is different from a CD, where your rate stays the same for the entire term.
Key Takeaways
- MMA accounts earn more interest than regular savings accounts because you keep a higher minimum balance and make fewer withdrawals.
- The interest rate changes with market conditions, so your earnings go up or down depending on what the Federal Reserve does.
- Federal law limits you to six withdrawals per month (though some banks have relaxed this rule), and some withdrawals may trigger fees.
- You can access your money whenever you need it, unlike a CD, but the tradeoff is a higher minimum balance requirement, which varies by bank.
- MMA accounts are FDIC-insured up to $250,000, so your principal is protected even if the bank fails.
How the interest rate works on an MMA account
When you open an MMA account, the bank tells you the current Annual Percentage Yield (APY). This is the actual return you'll earn in a year, including compounding. But that rate is not a promise—it's a snapshot of what the bank is offering right now.
The bank adjusts the rate whenever it chooses, usually in response to Federal Reserve rate changes. If the Fed raises rates, your MMA account rate typically rises within days or weeks. If the Fed cuts rates, your MMA rate falls. The bank is not required to pass along every Fed increase, and some banks move faster than others. Shop around before opening an account, and check your bank's rate regularly—if it falls too far behind competitors, you can move your money to a higher-paying account at another bank.
Interest compounds daily or monthly, depending on the bank. Daily compounding means you earn interest on your interest more often, which adds up to slightly more money over time. The difference is small, but it matters if you're keeping a large balance for years.
Minimum balance requirements and fees
Most banks require you to maintain a minimum balance to open an MMA account and to keep earning the advertised rate. This minimum varies widely—some banks ask for $2,500, others for $10,000 or more. A few online banks have no minimum at all.
If your balance drops below the minimum, the bank may do one of three things: charge you a monthly fee (often $10 to $25), drop your interest rate to a lower tier, or close the account. Read the account agreement before you open it so you know what happens if you dip below the threshold.
Some banks also charge a fee if you exceed the withdrawal limit in a single month. This fee is usually $10 to $25 per excess withdrawal. Other banks simply refuse the withdrawal or convert your account to a regular savings account if you withdraw too often.
Withdrawal limits and how they work
Federal Regulation D once capped all MMA and savings account withdrawals at six per month. That rule was suspended in 2020 and has not been reinstated, so banks now set their own limits. Most banks allow unlimited withdrawals, but some still cap you at six or impose fees after a certain number.
The limit typically applies to transfers and electronic withdrawals—not to in-person withdrawals at a branch or ATM. If you need to withdraw cash frequently, an MMA account may not be the right fit. If you're using the account to save money and only touch it occasionally, the withdrawal limit is rarely a problem.
Transfers between your own accounts (like moving money from your MMA to your checking account) usually count toward the limit. Transfers to someone else's account also count. Withdrawals by check or ATM may or may not count, depending on your bank's rules. Ask your bank to explain their specific policy before you open the account.
MMA accounts versus savings accounts and CDs
| Feature | MMA Account | Regular Savings Account | Certificate of Deposit (CD) |
|---|---|---|---|
| Interest rate | Variable (changes with market) | Variable (usually very low) | Fixed (locked in for the term) |
| Minimum balance | Usually $2,500–$10,000 | Often $0–$500 | Varies, often $500–$2,500 |
| Access to money | Anytime (with withdrawal limits) | Anytime (unlimited) | Only at maturity (penalty if early) |
| Best for | Saving money while keeping it accessible | Emergency fund or frequent access | Money you won't need for months or years |
Choose an MMA account if you have a chunk of money you want to grow but might need within the next year or two. Choose a regular savings account if you need to withdraw frequently or can't maintain a high minimum balance. Choose a CD if you're confident you won't touch the money for a set period and want the highest may provide rate.
FDIC insurance and safety
MMA accounts at banks are covered by FDIC insurance up to $250,000 per depositor, per bank. This means if the bank fails, the government will reimburse you for your balance up to that limit. Your interest earnings are also covered as long as the total stays under $250,000.
If you have multiple accounts at the same bank—a checking account, a savings account, and an MMA account—the FDIC insurance covers each account type separately. So you could have $250,000 in your MMA account and another $250,000 in a savings account at the same bank, and both would be fully protected.
MMA accounts at credit unions are covered by a similar program called NCUA insurance, also up to $250,000. Online banks are still banks, so their MMA accounts carry the same FDIC protection as brick-and-mortar banks.
When an MMA account makes sense
An MMA account is useful if you're saving for a goal that's one to three years away—a down payment on a house, a car, a wedding, or a sabbatical. You earn more interest than a savings account, but you can still access the money if an emergency comes up or your plans change.
An MMA account is less useful if you need to withdraw money frequently, can't maintain the minimum balance, or are saving for something more than five years away (in which case a CD or investment account might serve you better). It's also not the right choice if you're building an emergency fund and need to keep your money in a low-barrier account.
Compare rates across banks before you open an account. Online banks often pay higher rates than brick-and-mortar banks because they have lower overhead. The difference between a 4.5% APY and a 5.0% APY might not sound like much, but on $50,000 it adds up to $250 per year.
Frequently Asked Questions
Can I withdraw money from an MMA account anytime I want?
Yes, but there may be limits. Most banks now allow unlimited withdrawals, but some still cap you at six per month or charge a fee for excess withdrawals. Check your bank's policy before opening the account. In-person withdrawals at a branch or ATM are often not counted against the limit.
What happens if my balance drops below the minimum?
The bank may charge you a monthly fee (usually $10–$25), lower your interest rate to a non-competitive tier, or close the account. Some banks waive the minimum for customers who set up automatic deposits. Read your account agreement to know what your bank does.
Is my money safe in an MMA account?
Yes. MMA accounts at banks are FDIC-insured up to $250,000, meaning the government will reimburse you if the bank fails. MMA accounts at credit unions are NCUA-insured with the same $250,000 limit. Your principal and interest are both protected.
How often does the interest rate change on an MMA account?
The bank can change the rate anytime, though most adjust it when the Federal Reserve changes its benchmark rate. The Fed typically meets eight times a year. Your bank is not required to pass along every increase or decrease, so rates can vary between institutions.
Should I choose an MMA account or a CD?
Choose an MMA account if you might need the money within one to three years. Choose a CD if you're confident you won't touch the money for a longer period and want a may provide rate. CDs usually pay more than MMA accounts because your money is locked away.