Money Market Account

A Money Market account (MMA) is an NCUA-insured deposit account that offers higher interest rates than traditional savings accounts. These accounts can come with checks and/or debit cards for easy withdrawals and transfers from other financial institutions. The funds in an MMA are invested in short-term debt instruments (like Treasury bills, certificates of deposit (CDs) – also known just as Certificates, and other investments with low risk but high liquidity.

How Do Money Market Accounts Work? 

Money Market accounts (MMAs) are a type of savings account offered by banks and credit unions. They typically offer higher interest rates than traditional savings accounts. However, they also have certain restrictions – like on how much money can be withdrawn each month. Money Markets are safe – they’re NCUA-insured up to $250,000 per depositor.

MMA accounts differ from other types of accounts in that they require a minimum balance to earn the highest rate of return. For example, Island Federal Credit Union requires at least $2,500 to open an Island Money Market Plus Money Market account (note the Island Money Market Gold requires a $50,000 minimum opening balance). 

If you have less than the minimum balance in your MMA, you won’t get the best rate available; however, any amount over this minimum earns the same high yield regardless of how much is deposited.

Savings accounts

Savings accounts are similar to Money Market savings accounts in that they offer higher interest rates than checking accounts. One difference, though, is there may not be a required minimum balance for some savings accounts. Another differentiator is that most of the time, you can withdraw from a savings account without penalty. Be aware, though, some savings accounts limit you to a limited number of transactions  – like six – per statement cycle.

Savings accounts can have lower monthly fees than MMAs, which often charge you if your account falls below the required minimum balance during any given month.

Checking accounts

Checking accounts have more flexibility in terms of deposits and withdrawals since there’s no limit on either activity. In addition, some checking accounts come with fewer fees, like overdraft protection or maintenance fees. However, checking accounts usually pay very low (or no) interest, so you might want to look elsewhere if earning high yields is your goal.

CDs/Share Certificates/Certificates

Share Certificates are another type of deposit product. They can pay out higher returns than regular savings or checking products. However, Certificates lock away funds for a set time (for example, five years). This means you can’t access the money until after the Certificate matures unless you’re willing to pay the penalty. The longer terms tend to pay out better returns but can put your funds at risk due to inflation.

Pros and Cons of Money Markets

MMA accounts can be a great way to save, but like most things, they do have some drawbacks.

Yes, they do offer higher interest rates than regular savings accounts and can be used as an alternative to investing in stocks or bonds. And, they provide more liquidity than some other investments, since funds can be withdrawn without penalty. However, before opening a Money Market account, you should consider both sides of the story.


  • Higher interest rate: Money market accounts offer higher interest rates than traditional savings accounts. This means that you can earn more money on your deposits over time.
  • Liquidity: A Money Market account is a liquid asset, meaning you can access your funds quickly and efficiently when you need them. This makes it an ideal option for those who anticipate needing to make frequent withdrawals or transfers from any type of savings account.
  • Safety: Money Market accounts are insured by the National Credit Union Administration (NUCA) for up to $250,000 per depositor, making them a safer investment option.
  • Flexibility: Unlike other investments like stocks and bonds, Money Markets allow you to withdraw your funds at any time without penalty or fees. You can also easily transfer funds between different financial institutions if needed.


  • Lack of liquidity: Yes, we just said that MMAs are considered a liquid asset, but keep in mind they have limited liquidity compared to other investments. This means it may take longer to access your funds in an emergency. It’s also a process to move large sums of money quickly without incurring significant fees or penalties.
  • Limited investment options: MMA accounts only allow you to invest in a few securities, such as Certificates, Treasury bills, and short-term corporate debt instruments like commercial paper and banker’s acceptances. As a result, there’s less opportunity for diversification than with more traditional investment vehicles like mutual funds or exchange-traded funds (ETFs).
  • Fees: Many banks charge fees for opening and maintaining a Money Market account, including monthly maintenance fees and transaction costs associated with transferring funds into or out of the account.  
  • Often come with certain restrictions and limitations: Money Market accounts can require more significant minimum deposits to open an account. Some have higher minimum balance requirements to avoid fees or loss of interest earnings. Also, the number of withdrawals allowed per month may be limited, making it difficult for customers who need access to funds quickly or frequently.

Should You Open a Money Market Account? 

Thinking about opening a Money Market account? It might be an excellent way to save money and earn interest on your deposits. It also may help diversify your portfolio and offer higher rates of return than traditional savings accounts. In short, it’s possible you’ll get more out of your hard-earned cash when you open a Money Market account. But before you do, it’s important to understand exactly what it means and how Money Market accounts work.

Island Federal Credit Union offers multiple Money Market products that provide the best of both worlds – high-yield savings and easy access to your funds. With competitive interest rates, free online banking, no monthly service fees, and NUCA insurance of up to $250,000 on deposits, we offer an ideal solution for anyone looking for more than just a basic savings account option. 

Reach out today to take advantage of our convenient services and start building your financial security for tomorrow!