Money Market Deposit Accounts

This type of bank account pays interest at a higher rate than the rate paid on interest-bearing savings and checking accounts, and most accounts impose a minimum balance for the account to start earning interest, which is usually higher than that imposed on a checking or savings account. A service charge is also normally imposed if the balance falls below a certain level.

MMDAs invest your balance in short-term debt such as commercial paper or Treasury Bills. These accounts provide only limited withdrawals and check writing privileges (six transfers per month, with a maximum of three of these by check).