What is a Money Market Account? 

Written by:

Baylor Cox

Reviewed by:

You can think of a money market account as a type of savings account that serves as a middle ground between a checking account and a savings account. MMA’s (Money Market Accounts) also have the added benefit that many MMA’s earn additional interest compared to traditional savings accounts. While MMA’s can be a great option it is important to note that they do come with some important caveats to consider.  

Many money market accounts limit the number of transfers and withdrawals you can make, but WeStreet offers MMA’s with no limits on withdrawals, deposits, or transfers. Money markets usually require a substantial amount of money to open and require a minimum balance to earn interest. To open a money market account at WeStreet, you need to deposit a minimum of $2,500 and maintain a minimum balance of $5,000 to earn interest dividends on your deposit.  

Money market accounts may also lack some of the protections and conveniences of checking accounts. For a money market account through WeStreet, ATM withdrawals and debit cards are unavailable. WeStreet money market accounts also do not offer overdraft protection.  

Despite these drawbacks, money market accounts may be an option to consider if you are seeking a deposit account that earns higher interest than a regular savings account. You can view the current interest rate for a money market account at WeStreet here.  

How do Money Market Accounts Work?  

The way that money market accounts work is similar to a traditional savings account. You earn interest based on the balance of your account. For WeStreet specifically, they accrue interest daily and pay it monthly. Your money market account is insured by the NCUA.  

Be careful not to confuse money market accounts with money market mutual funds. Banks and credit unions offer money market accounts, and the FDIC or NCUA insures them, respectively. Investment firms offer money market mutual funds as investment accounts that carry market risk and do not receive insurance from the FDIC or NCUA.  

How are High-Yield Savings Accounts and Money Market Accounts Different?  

High yield savings accounts are a great way to earn interest on your money. In practice, HYSA’s (High Yield Savings Accounts) basically act as traditional savings accounts with supercharged interest rates, with the downside being that they are mostly offered by fully digital financial institutions.  

HYSA’s and MMA’s (Money Market Accounts) have a few key differences. HYSA’s often have a slightly higher interest rate than money market accounts, though because of this they typically offer less flexibility. Typically, Withdrawals to HYSA’s are done through electronic transfers since they do not offer checks or debit cards.   

Which is the Right Option for Me?  

Determining whether a high yield savings account or money market account is better suited for you depends on your financial situation and what you are looking for in an account. If your goal is to maximize savings and account flexibility isn’t a concern a high yield savings account might be a good option for you. If you would like some flexibility and meet the deposit requirements, then a money market account may be the better fit.  

How are Money Market Accounts and Certificates Different?  

On the spectrum established earlier where money market accounts fall between checking and savings accounts, certificates (or CD’s as you may know them) fall outside the boundaries on the side of savings accounts. In other words, certificates offer greater returns than savings accounts while having drastically less flexibility.   

Certificates also function differently compared to savings, checking, high yield savings, and money market accounts. This is because they are not an account at all; they work more like a loan you make to your credit union than a traditional account. It is important to note though, that like the listed accounts certificates are NCUA insured.  

With a certificate you deposit a specific amount of money which your credit union agrees to pay you back with interest, at a future date. Usually, certificate terms range from 3-60 months. You cannot deposit additional money into a certificate, and you cannot withdraw the money you have deposited without facing penalties.   

The good news is that certificates earn significantly more interest than either traditional savings accounts or money market accounts. If maximizing interest is your goal and you don’t mind being unable to withdraw the funds you put into a certificate for its duration without a penalty, then certificates may be a good option to consider.  

Fun fact: the reason they are called certificates is because historically, the certificate was a physical certificate given to the depositor as proof of their deposit. Though this is no longer the case, the name stuck!