Money Market Deposit Account

Definition

A money market deposit account is a government insured account that is offered at most depository institutions.

Interest

Interest for a money market deposit account depends upon the account balance. This is also known as tiered interest rates. Therefore, the higher the account balance, the higher the interest.

Accessibility

Money market depository accounts have a minimum balance requirement and limit one to a certain number of transactions each month. This in turn makes the money market depository accounts less liquid than checking or savings accounts.

Features

Some features of money market deposit accounts include....

  • Customers usually are required to deposit a minimum amount to open an account (usually $1,000)
  • If the average monthly balance falls below a specific amount, interest rates lower
  • Money market deposit accounts have higher average return than checking and savings accounts