money market deposit account (MMDA)

In the United States, a money market deposit account (MMDA) is a deposit account that is considered a savings account for some purposes, but upon which checks can typically be written, subject to certain restrictions. Like a Negotiable Order of Withdrawal account, it is structured to comply with Regulation Q, which forbids paying interest on checking accounts. Thus money market deposit accounts are accounts that bear interest, and on which checks can be written, but, due to various restrictions, are not legally checking accounts, and thus do not run afoul of Regulation Q.

Typical restrictions are that a fairly high minimum balance must be maintained in order to avoid fees. With the advent of online banking, many banks are able to pay a high interest rate on a low balance, sometimes as low as $1. A debit card is often issued for making withdrawals.

In theory, the restrictions allow the bank to invest the money with more discretion, allowing a higher return. The return is often competitive with money market mutual funds, although nothing requires a bank to invest deposits in these types of accounts into the money market.