How much is a money market account minimum balance?

If you’re shopping for a new deposit account, you may have come across money market accounts (MMAs) while comparing options. Certain banks and credit unions offer these accounts in addition to savings and checking accounts. Money market accounts share some features of saving accounts and checking accounts, such as check-writing capabilities and decent interest rates.

But they have some distinct features too. For instance, you might see relatively high figures listed for money market account minimum balance requirements. Your minimum balance is the amount your bank requires to establish your account, earn interest, or avoid fees. Here’s what to know about money market account minimum balances if you’re considering opening one.

Money market account minimum balance requirements

When it comes to money market account minimum balance requirements, there’s not one set amount. Instead, minimum balance requirements vary by bank or credit union, and sometimes by individual account. So while one bank may require you to maintain a $2,000 minimum balance in your money market account to avoid fees, another might not have a minimum balance requirement.

In addition to minimum balance requirements, certain institutions may also have initial deposit requirements for money market accounts. This is the amount your bank or credit union requires you to add to your account after opening it. As with minimum balance requirements, initial deposit requirements also vary by institution. For instance, you might see a $500 initial deposit requirement at one credit union and a $0 initial deposit at another.

Factors that influence money market account minimum balances

With money market accounts, it’s fairly common to see a tiered rate structure, meaning your interest rate differs depending on your account balance. Accounts with large balances, such as $10,000 or more, may get the highest rates, while smaller balances may only be eligible for lower rates.

While not all MMAs have them, fees might apply if you don’t maintain the minimum balance your bank or credit union requires. Before opening a new money market account, it’s essential to review its terms and conditions, which cover any minimum balance requirements, account rates, and potential fees.

Advantages of meeting minimum balance requirements

If your money market account has a minimum balance requirement, it’s advantageous for you to meet it — banks and credit unions may charge monthly fees for falling below the minimum balance requirement, and doing so may also result in a lower interest rate, depending on whether there’s a tiered rate structure in place.

If it’s doable, it can be beneficial to maintain a large enough balance to get the best possible interest rate for your money market account. For example, say your bank offers a 4.50% rate for balances $10,000 or more, but a 1.50% rate for balances $1,000 or less; the difference between interest earnings can be substantial:

Strategies to help you meet money market account minimum balance requirements

If you’re concerned you’ll struggle to meet your money market account’s minimum balance requirements, here are a couple of approaches you can take:

• Set up automatic transfers: Using automatic transfers from an existing savings account could help you maintain your MMA’s minimum balance. These are typically easy to set up through your bank account’s online dashboard.

• Consolidate accounts: If you have a traditional low-rate savings account, you might also consider consolidating that balance with your money market account balance. This could result in a higher interest rate and more money earned on your balance.

• Reallocate your budget: Revisiting and reallocating your budget could also help you meet your MMA’s minimum balance requirement. For instance, you might reduce your spending in certain categories and move any money saved into your MMA.

While meeting your MMA’s minimum balance requirement is an admirable goal, it’s important to consider your overall financial goals as well. If meeting that requirement means stretching yourself too thin financially, it may not be worth it. Alternatively, a different MMA or high-yield savings account with a low or no minimum balance requirement may be a better choice.

Things to consider before opening a money market account

Before opening an MMA, consider whether you can comfortably meet any minimum balance requirements. Also, be aware that your interest rate could change as your bank or credit union adjusts its deposit account rates. While you won’t lose money with an MMA, you could earn less interest due to future rate decreases.

As you compare accounts, research applicable fees, requirements, and rates. If available, read the terms and conditions of each account you’re considering. Doing so will allow you to make an informed decision about which MMA is best for you.