What is a Money Market Account (MMA)?

A money market account (MMA) is a type of savings account that functions as a checking account, allowing you to earn interest on your balance while still having easy access to your funds. Unlike a certificate of deposit account, withdrawing money from an MMA won’t incur withdrawal fees. Additionally, the interest rate for an MMA is higher than that of a regular savings account, and interest is compounded daily and paid monthly.

Explore Argent Credit Union’s money market account, the Money Management Account (MMA). Our MMA offers a competitive interest rate that grows as your balance grows with no monthly fees.

Pros and Cons of Money Market Accounts

Money market accounts (MMAs) are a popular financial tool that combines the features of both savings and checking accounts. With a range of benefits, including higher interest rates and easy access to money, MMAs can be an attractive option for many savers. However, it’s essential to weigh the pros and cons before opening an account, as they come with specific requirements and limitations that may affect your financial goals.

Benefits of a Money Market Account

1. Up to $250,000 Is Insured by the NCUA /FDIC

NCUA insurance protects money market accounts in credit unions up to $250,000 per depositor, per institution, offering peace of mind for your savings. Similar to the NCUA, the FDIC offers similar insurance for banks.

2. Competitive APYs

Higher yields than regular savings accounts typically offer better interest rates due to a higher minimum balance requirement.

3. Check-Writing Privileges

Some MMA’s offer check-writing abilities, which is typically not a feature of most traditional savings accounts.

4. Stable Returns

Unlike riskier investments (like stocks or bonds), MMAs provide stable, predictable interest without the risk of losing the principal, making them ideal for conservative savers.

Money Market Account Disadvantages

While Money Market Accounts (MMAs) offer several benefits, there are some potential drawbacks to consider:

1. Higher Minimum Balance Requirements

MMAs may require a higher minimum balance than regular savings accounts. Falling below the required balance might reduce interest rates or additional fees.

2. Limited Transactions

While MMAs provide liquidity, they typically have transaction limits, often restricting the number of monthly checks, transfers, or withdrawals you can make. This could make it less convenient if you need frequent access to your money..

3. Fees

Some Money Market Accounts may incur monthly maintenance fees if you don’t maintain a certain balance. These fees can erode the interest earned, especially for accounts with smaller balances.

4. Not Ideal for Frequent Transactions

MMAs may not be the best fit for members who need regular access to their funds for payments or withdrawals due to their limited transaction capabilities.

5. Fluctuating Interest Rates

The interest rates on MMAs are often variable, meaning they can fluctuate with market conditions. In a low-interest-rate environment, the returns on your MMA may be less attractive.

Compare MMA’s With Other Savings Options

When choosing a money market account, prioritize one with a high interest rate and no monthly fees. Some institutions require balances of $10,000 or more to qualify for their best rates or to waive fees, while others have no minimum balance requirement. Select an account with a minimum opening balance that fits your budget.

Account Type	Account Features
Money Market Account (MMA)	Interest rates are competitive with savings accounts Higher account minimums and balance requirements Monthly transaction limits Insured by the FDIC or NCUA Funds are more accessible than a savings account
Savings Account	Interest rates are competitive with MMA’s, but often lower than CD rates Lower minimums and lower balance requirements High-yield savings accounts may earn more than some MMA’s Funds are less accessible than a MMA
Certificates of Deposit (CDs)	CD’s typically have the highest interest rate of all bank accounts Money is inaccessible for a fixed time Best for people who don’t need access to their funds for an extended period of time
Money Market Fund	Generally higher interest rates than MMA Aren’t insured by the FDIC or NCUA Opened at a brokerage rather than a bank or credit union Invest in low-risk, short-term investments Investments fluctuate in value No limit on withdrawals or transfers
Checking Account	Earns little to no interest Unlimited withdrawals Often has low or no minimum balance requirements May charge monthly fees Typically includes a debit card and check-writing abilities

When to Choose a Money Market Account

A money market account is ideal for individuals who:

Want Higher Interest: Those seeking a higher interest rate than traditional savings accounts offer while keeping their funds accessible.
Needs Access to Their Money: If you want the flexibility to write checks or make debit transactions while maintaining the ability to earn interest, a money market account could be a good fit. It’s perfect for those who need limited access to their money but don’t want it tied up in long-term investments.
Have Larger Balances: People who can maintain a higher balance—typically $5,000 or more—are often the best candidates since many money market accounts have higher minimum balance requirements to avoid fees or qualify for the best rates.
Looking for Low-Risk Savings: MMAs are great for people looking to expand their savings while protecting their money from market risks, as the FDIC or NCUA typically insures money market accounts.
You Have Short-Term Savings Goals: A money market account can help you save more quickly and is perfect if you are saving for a new car, a wedding, or other significant expenses.
You’re Building an Emergency Fund: Accounts with high liquidity are ideal for unexpected expenses, such as urgent repairs or hospital visits.
Want Flexibility for Short-Term Savings: Those saving for a short- or medium-term goal (e.g., an emergency fund, vacation, or major purchase) may appreciate the balance of earning interest while still having relatively easy access to funds. An MMA is not ideal for saving for retirement.

Open a Money Management Account with Argent

Interested in opening an MMA? Learn more about Argent Credit Union’s MMA, the Money Management Account. Contact us today to learn more!

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