Perhaps you’ve heard others mention money market deposit accounts (MMDAs) and are interested in learning more. Here at Fidelity Federal, we provide a standard MMDA and occasionally run special promotions with high annual percentage yields (APYs) to help your savings grow faster
This blog from Fidelity Federal discusses the ins and outs of MMDAs and shares what benefits you can expect from this type of account.
Understanding Money Market Deposit Accounts (MMDAs)?
Money market deposit accounts (MMDAs) are a highly liquid investment option, allowing you to earn a higher interest rate while still being able to access your funds. Unlike a certificate of deposit (CD) where your money might be inaccessible for months or even years, MMDAs offer greater flexibility.
Previously, the Federal Reserve Board limited withdrawals or transfers to six per month, but this rule was removed in 2020 during the COVID-19 pandemic and has not been reinstated. However, some financial institutions may enforce similar limits, so it’s essential to inquire about the terms.
Money market accounts are intended for short-term goals or savings, rather than long-term purposes like retirement. Some accounts also come with an ATM card, allowing you to use ATMs for deposits, withdrawals, and transfers, as well as write checks against your account balance.
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Benefits of Money Market Deposit Accounts
1. Higher Interest Rates
The primary advantage of an MMDA is the higher interest rate compared to a traditional savings account. It’s a fantastic way to maximize your savings and watch your money grow.
2. Safety
According to the Consumer Financial Protection Bureau, money market accounts are insured by the Federal Deposit Insurance Corporation (FDIC) at banks for up to $250,000 held by the same owner or owners. This means, even if the bank fails, your money is shielded.
3. Accessibility
Depending on your account terms, you can typically make a set amount of transfers or withdrawals from your MMDA per statement cycle. This provides a good balance between earning interest and maintaining some access to your funds.
4. Check Writing Privileges
Many money market accounts offer check-writing capabilities, which are not typically available with standard savings accounts. This offers more flexibility when accessing funds.
5. Tiered Interest
As your balance increases, so does your interest rate. This tiered interest model benefits those who maintain higher balances in their account — the more you save, the more you earn!
In conclusion, a money market deposit account is a superb financial tool for those who aim to derive a higher interest return from their savings while still maintaining accessibility to their funds. It strikes an ideal balance between growth and convenience.
Open a Money Market Deposit Account at Fidelity Federal
Reach out to one of our banking specialists at Fidelity Federal today to see if opening an MMDA is the right move for your financial goals. We’d be happy to help weigh your savings account options to find the right one for you.
