Money Market Deposit Account (MMDA) Also Called Money Market Account



A Money Market Demand also known as Money Market Deposit Account (MMDA) is a hybrid type of savings account offered by banks and brokerage firms.  It is primarily a savings account with some limitations and rewards.  MMDA and Money Market Deposit Accounts are often used to “hold” your money (short term) between investments. These accounts are FDIC insured.  It is a great place to put emergency money.  It gives you flexibility, access to your money, and pays a higher rate than a traditional savings account. MMDA’s have a higher minimum and initial requirement than a traditional savings account.



Money Market Accounts are a savings account with interest (check the rates, they vary amongst banks).  The bank pays a higher interest rate for these accounts than those of a traditional savings account.  The interest rates typically follow that of short-term market interest rates, and change as the market changes.  With MMDA’s you can write between one and three checks a month without penalty.  You can make between three to a maximum of six withdrawals or transfers each month.  The catch… a higher initial opening amount and a higher balance of $1,000-$2,500 must be maintained or there is a penalty if you fall below that amount (or another amount previously specified by your bank).  Check with your bank on their money market rules and requirements.  Some people confused MMA’s with Money Market Mutual Funds, which is a mutual fund and not FDIC insured bank account.