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A money market account (MMA) or money market deposit account (MMDA) is a deposit account offered by a bank, which invests in government and corporate securities and pays the depositor interest based on current interest rates in the money markets.
A money market account typically requires a higher minimum balance than a traditional savings account to open the account and/or to avoid maintenance fees. In addition, there may be some restrictions on the number of transactions you can perform each month for free. The upside is that money market rates are, on average, higher than savings account rates.
This profile makes the money market account ideal for larger lump sums that you need to keep liquid but do not need to access often. Good uses for a money market account include saving for a down payment, maintaining reserves for home repairs or property tax payments, or keeping funds available for prepaying your mortgage.
Unlike its commonly confused cousin, the money market fund, a money market account is covered by FDIC insurance at member banks. Money market accounts are therefore a safe place to keep balances up to the FDIC limits ($250,000 per depositor per institution).