Our articles, research studies, tools, and reviews maintain strict editorial integrity; however, we may be compensated when you click on or are approved for offers from our partners.

Tiered Money Market Accounts

min read

Money market accounts (MMAs) are relatively safe investments that usually pay more interest than a regular savings account. The interest rate will change depending upon the amount of your deposit. Here's what you need to know.

What Is a Money Market Account?

MMAs, which are also called money market deposit accounts, offer better interest rates than savings accounts. In some cases the interest rate may be twice that of a regular savings account. Many people use them to park cash they want to have quick access to for future purchases. For instance, if you sell off shares of a mutual fund, the proceeds may be placed into a money market account until you decide what to do with it.

With a MMA you'll usually be restricted to writing only a few checks each month. Also, some banks have minimum balance requirements while others don't. It's not uncommon to have a minimum balance requirement of $1,500 to $2,500.

One of the main reasons people put their money in a MMA is because the accounts are considered less risky than other investments. The money in an MMA is insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000.  So even if your bank goes out of business your money will be safe.

Why Open a Tiered Money Market Account?

Having a tiered MMA means that the more your money grows, the more you'll earn. Once your money reaches a certain amount your interest rate will be increased. Regular savings accounts don't offer this feature. With a tiered account, your interest rate will increase each time the balance rises to a certain level. For instance, you may see an interest rate increase when your balance reaches $2,000. These accounts are a good deal for people who have large amounts of money they don't want to leave in a low-interest savings account.

How to Open an Account

You can ask about MMAs at your local bank or shop around for one on the Internet. In many cases you'll get a higher interest rate with an Internet account. When you deposit your money, the money manager for the MMA usually invests them in T-bills, savings bonds, CDs, or other investments that are considered relatively safe.

Many people confuse money market accounts with money market funds. Money market funds are not FDIC-insured and are basically mutual funds that hold short-term debt investments.

Money market accounts aren't going to pay as much as a lot of more risky investments. But if you want to know that your money is going to be safe and easily accessible, a MMA may be a good choice.



Federal Deposit Insurance Corporation


"Sizing up 'safe harbor' money investments," by Walter Updegrave, www.cnnmoney.com.

Compare Rates

1 Comment
Janice Atkins 3 August 2016 at 10:51 pm

What is the minimum $$ to open this account