A money market account is a bank or credit union deposit account that usually pays more interest than a plain savings account, often in exchange for a higher minimum balance, and typically comes with limited check-writing or a debit card. Crucially, it is a deposit account, so it is covered by federal deposit insurance up to the legal limit. That makes it very different from a money market fund, which is an investment and is not insured.

That one word, account versus fund, is the most important distinction in this topic, and it is the one most often confused. Here is how a money market account works, what the rate depends on, and where the limits are.

How a money market account works

You deposit cash, the bank pays you a variable interest rate, and you keep access to the money, usually through a debit card, checks, or transfers, though often with some limits on how you can move it. The rate is not fixed. The bank can change it at any time, which means the attractive yield you open with can fall later without warning.

Banks often set a higher minimum balance for these accounts than for basic savings, commonly somewhere from $1,000 to several thousand dollars, and some pay in tiers, where a larger balance earns a higher rate. Interest you earn is taxable as ordinary income.

The insurance is the point

Because a money market account is a deposit, it carries federal deposit insurance. The FDIC states that your deposits are automatically insured to at least $250,000 at each FDIC-insured bank. Credit union accounts get the same protection through the National Credit Union Administration. That coverage is per depositor, per insured bank, per ownership category, so the way accounts are titled affects how much is protected.

This is the hard line between a money market account and a money market fund. A fund is a mutual fund that invests in short-term debt; it is regulated by the Securities and Exchange Commission and is not FDIC-insured, so it can, in rare stress, lose value. If deposit insurance matters to you, confirm you are opening an account at an insured institution, not buying a fund. The insurance mechanics are the same ones covered in how FDIC insurance works.

What sets the rate

Money market account rates move with short-term interest rates, which are anchored by the Federal Reserve's policy rate. After the Fed's October 28, 2026 decision, the federal funds target range stands at 3.75 to 4.00 percent, and deposit rates across savings and money market accounts track that backdrop. For comparison, a 3-month Treasury bill yielded about 4.00 percent on November 5, 2026.

There is also a regulatory ceiling for weaker banks. The FDIC sets a national rate cap, defined as the higher of the national average rate plus 75 basis points, or 120 percent of the comparable Treasury yield. Less-than-well-capitalized banks cannot pay above that cap. For most savers the practical takeaway is simpler: the headline rate is variable and competitive, so it pays to compare.

Money market account versus savings and CDs

A money market account sits between a savings account and a certificate of deposit. Against a savings account, it often pays a little more but asks for a higher balance and may add check access. Against a CD, it keeps your money reachable but does not lock the rate, so the yield can drop. A CD, by contrast, fixes the rate for a term but charges a penalty if you withdraw early, as set out in how do CDs work.

Which fits depends on your own situation, and this is not advice to pick one. The honest comparison is on four points: the yield after any fees, the minimum balance, how easily you can reach the money, and whether the rate is fixed or variable.

The catches to check before you open

Read the fine print on three things. First, the minimum balance, and any monthly fee if you drop below it, because a fee can quietly erase the extra yield. Second, any limits on withdrawals or transfers. Third, whether the quoted rate is an introductory offer that steps down later. A rate that looks market-beating on day one can revert once a promotional period ends.

What to watch

Watch the rate over time, not just at sign-up, because it is variable and banks adjust it as the Fed moves. Watch the minimum-balance rule and the fee that applies if you fall below it. And keep the insurance front of mind: confirm the institution is FDIC- or NCUA-insured and that your balance stays within the $250,000 coverage for your ownership category. A money market account is a steady, insured place to hold cash that earns a competitive yield, as long as you check the minimums and keep watching the rate.