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It is basically a saving account that is offered by a FDIC bank with limit transaction privileges. Generally, you can withdraw up to six transactions per month with less than three transactions against the account. For more details of transaction limitations, you can check with Regulation D, Reserve Requirements of Depository Institutions. You do need to have minimum balance requirement for money market account. The good news about MMA is the interest rate is usually higher than traditional passbook saving rate. Before you invest in MMA, you should around for the MMA rates.
Unlike MMA, money market mutual funds are not usually FDIC insure. A money market mutual fund is a collection of short term investments from mutual fund. Sometimes money market mutual fund is also called, “Cash Investments”, because it has very short maturities. The law regulates that maturity of average money market fund must be less than ninety days. Generally, money market funds can be categorized into two types.
Government Market Funds: This type of fund is invested in U.S. government and securities. Some of these funds will only buy government and agency securities, but some of them may be Treasury- Only Fund.
Corporate Money Funds: Corporate money funds invest in money market securities by business.
Before you invest in money market mutual fund, you need to watch out for the annual account fee and expense ratio. They can decrease your returns significantly.
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