Money Market Accounts

Money market savings accounts (MMAs) are interest-bearing accounts held at a bank or credit union, differing from traditional savings accounts in their high annual percentage yield (APY) and by offering debit card and check-writing privileges. 

Features to Consider

  • Check Writing and Debit Card Privileges: One of the primary advantages of an MMA is the ability to write checks and utilize a debit card, neither of which are common to traditional savings accounts. This means investors have easy access to their liquid capital, even while in a high-interest account. 
  • Limited Withdrawals: While helpful to be able to pull money out with a check or debit card, MMAs do have withdrawal limits. Federal regulations limit depositors to a total of six transfers and electronic payments per month. This does not apply to in-person, by-mail, or ATM transactions. 
  • Fees: Banks may charge monthly maintenance fees, some of which can be waived if the account meets a minimum balance requirement. 
  • APY: This interest rate indicates earning potential and serves as an initial point of comparison when choosing an account. It is also worth considering whether interest is compounded monthly or annually. 
  • Minimum Balance Requirements: Many MMAs have minimum deposit requirements as well as minimum account balance requirements. Falling below this balance can result in fees, so it is something to keep in mind when making deposits and withdrawals.
  • FDIC Insured: MMAs are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor per bank. Similarly, capital is insured by the National Credit Union Administration (NCUA) at credit unions. MMAs are a safe place to hold capital for this reason. 

Savings Alternatives

MMAs can be a great alternative to traditional savings or checking accounts, offering higher yields and flexibility. They are one of many savings alternatives, with others including high yield savings accounts and certificates of deposit (CDs). EquityMultiple has also introduced another option, Short Term Notes. Our diversified notes are functionally comparable to a corporate bond and offer much higher rates of return.

While not as liquid as an MMA, Notes can be a great opportunity for investors looking for a high-yield alternative with short term holds and monthly distributions. These diversified notes are used to pre-fund certain real estate investments on the EquityMultiple platform and have no associated fees.

The Bottom Line

Money Market Accounts are a great option for investors with short-term financial goals looking for higher interest rates than available with a traditional bank account. Offered by online banks and brick-and-mortar financial institutions alike, MMAs are a savings alternative with a unique set of advantages and disadvantages. 

 

*Past performance does not guarantee future results

*APYs are based on Bankrate’s National Average survey data, as of August 2021

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