Money Market Accounts Explained: When They Make Sense (and When They Don't)
If you've outgrown your regular savings account but you're not ready to lock money away in a CD or send it into the stock market, there's a middle ground worth knowing about: the money market account.
A money market account (MMA) sits at the intersection of saving and spending. You earn a higher dividend rate than a typical savings account, but you can still get to your money when you need it. That flexibility makes MMAs a great fit for certain goals, and a poor fit for others. Below, we'll explain how money market accounts work, when they're worth opening, and when a different account might serve you better.
How a Money Market Account Works
A money market account is a deposit account designed to reward larger balances with stronger earnings. You deposit money, the account earns dividends (the credit union equivalent of interest), and you keep full access to your funds without early-withdrawal penalties.
The trade-off is the minimum balance. At Members Credit Union, a Money Market Account earns the higher dividend rate as long as you maintain at least $500. If your average daily balance dips between $25 and $500, dividends are paid at the regular savings account rate. Below $25, no dividends are paid and a low balance fee applies.
That structure rewards consistency. The longer you keep your balance above the threshold, the more your money works for you.
Money Market vs. Savings vs. CD vs. Checking
These four account types are easy to mix up, so a quick comparison helps.
A regular savings account has a low minimum (just $25 to open at Members Credit Union) and pays a modest dividend. It's the right place to start saving and a smart landing spot for an emergency fund you might need quickly.
A money market account typically pays a higher dividend than a regular savings account but asks for a larger balance to qualify. You keep liquidity, and there's no penalty for taking money out.
A certificate of deposit (CD) generally pays the highest rate of the three, but you agree to leave the money untouched for a set term. Pulling it out early means an early-withdrawal penalty.
A checking account is built for daily transactions. It pays little or no dividend and isn't designed for growth.
In short: checking handles daily spending, savings holds your starter cushion, a money market account grows a larger cushion, and a CD locks money away for the best rate.
When a Money Market Account Makes Sense
A money market account is a strong choice when you want your money to earn more without giving up access. It tends to work well for:
An emergency fund that has grown past the typical 3–6 month threshold and deserves a better rate
A house down payment you're building over the next 1–3 years
A new vehicle fund where you want to be ready to buy when the right deal appears
Tax savings for self-employed members or freelancers setting aside quarterly payments
A wedding, vacation, or large planned purchase with a flexible timeline
The common thread: you'll likely need the money at some point in the near or medium future, and you want it to grow while it waits.
When a Money Market Account Doesn't Make Sense
A money market account isn't right for every situation. Skip it if:
You can't comfortably maintain the $500 minimum. Below the threshold you earn the regular savings rate, which erases the main advantage. Start with a Regular Savings Account and grow your balance first.
You need to write checks or swipe a debit card daily. A checking account is built for that.
You're saving for retirement or a goal that's 5+ years away. Over long horizons, investment accounts and retirement vehicles typically outpace deposit accounts.
You know you won't touch the money for a year or more. A CD will usually earn more for the same time period if you can commit to leaving it alone.
How to Open a Money Market Account at Members Credit Union
If you're already a Members Credit Union member, opening a Money Market Account is straightforward. You can complete a Subsequent Action form, visit any of our branch locations, or call member services at 800-951-8000 for help.
If you're not yet a member, the first step is joining. Once you're a member, you can fund your new Money Market Account from your paycheck through payroll deduction or set up an automatic transfer from your savings or checking account. Either method makes it easy to keep your balance above $500 without thinking about it.
Not sure if you have $500 to start? Open a Regular Savings Account with $25 first. Build the balance through automatic transfers or payroll deduction, then move into a Money Market Account once you cross the threshold.
Frequently Asked Questions
Are money market accounts at a credit union insured?
Yes. All deposits at Members Credit Union are federally insured by the National Credit Union Administration (NCUA), a U.S. Government agency, for up to $250,000 per depositor. That's the credit union equivalent of FDIC insurance at a bank, and the coverage is identical in scope.
Can I lose money in a money market account?
No, as long as you stay within NCUA coverage limits. A money market account is a deposit account, not an investment. It doesn't move with the stock market and the balance you put in is protected. The only ways your balance can shrink are fees (such as the low balance fee if you drop below $25) or withdrawals you make yourself.
Is a money market account the same as a money market fund?
No, and this is the most common mix-up. A money market account is a federally insured deposit account at a credit union or bank. A money market fund is an investment product sold by brokerage firms that holds short-term securities and is not federally insured. They sound alike but carry very different risk profiles.
What happens if my balance drops below $500?
Your account stays open and your money is still safe. You'll simply earn dividends at the regular savings account rate instead of the higher money market rate for any month your average daily balance is between $25 and $500. Below $25, no dividends are paid and a low balance fee is charged.
Can I have a money market account and a regular savings account at the same time?
Yes, and many members do. A common setup is to keep a small emergency cushion in a regular savings account for quick access and park longer-term savings in a money market account where it earns more.
Ready to Put Your Savings to Work?
A Members Credit Union Money Market Account gives serious savers what they're really after: stronger earnings, full access to their money, and the peace of mind that comes with federal NCUA insurance. No withdrawal penalties, no surprises, just a smarter place for the savings you've worked hard to build.
Open a Money Market Account today by visiting any of our branch locations, calling 800-951-8000. Not yet a member? Find out how easy it is to join Members CU and start saving smarter today.
