What Types of Money Market Deposit Accounts Are Available?

Financial institutions make money market deposit accounts (MMDAs) available in many variations. They vary by the minimum deposit required, the maturity, the interest or dividend rates paid out, and how the earnings rates are determined. A variety of names are used to describe MMDA accounts, for example, "money market plus account," "money market advantage account," "money market certificate," and similar terms.

Indexed MMDA rates are tied to the average yields of US Treasury bills.

Money market certificates are a hybrid of MMDAs and certificates of deposit. When they were first issued decades ago, they had a fixed maturity of six months and required a minimum deposit of $2,500. Interest or dividend rates were based on the average yields of US Treasury bills. This changed with the deregulation of the 1980s, and now each institution may set its own maturity, yield, and minimum deposit.

MMDAs used as individual retirement accounts are called money market IRAs. Because individual retirement account contributions and earnings may be tax-deductible or tax-deferred, these accounts have restrictions on when funds can be withdrawn.

Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary therefore, the information should be relied upon when coordinated with individual professional advice.