Business Money Market Accounts

Use a business money market account to build up accessible cash

By Cherie L. Berkley, Owner Legacy Letters, LLC

Business money market accounts (MMAs) are interest-bearing bank accounts that are invested in short-term securities through banks or credit unions. The benefits of a business MMA are many: they're convenient, earn you money, and are easy to access when necessary. Like a traditional savings account, an MMA allows you to make deposits and withdrawals, and transfer money. Unlike a savings account, an MMA allows you to earn a higher interest rate than a savings account does.

Here are the top three ways a business money market account can benefit your company:

Save money while earning a higher interest rate than a traditional savings account.
Tie your MMA into your business checking account and other business accounts for overdraft protection, automatic deposits, and more.
Withdraw money or close accounts easily without paying penalties.

Compare interest rates for the best overall earnings

Look for the best regular – not introductory – interest rate. An introductory interest rate is usually not the same as the regular rate, which kicks in a couple of months later, and you'll be earning at the regular rate for a much longer time.
Try: Bankrate.com is a great place to find the best rates at specific banks. Enter your state, city, and type of MMA, and violá – you have a side-by-side comparison of local bank MMA offerings with introductory and regular interest rates, and more. At Interest.com, input your info, choose "MMA", and compare rates near you.

Check out minimum requirements

MMAs usually require higher minimum balances and/or higher minimum initial deposits than savings accounts do. Find the right account with requirements your business can meet to avoid penalties. .
Try: Capital One's Business Money Markethas no fees or minimum balance requirements – in fact, you don't even have to visit a bank to open your account! At Netbank, you can open a small business MMA with $1,000, with no minimum balance requirements after the initial deposit.

Choose special features

The features of an MMA vary, so find out specifics before applying for your account. Many business MMAs allow checking account overdraft protection using the MMA funds, special "deposit only" cards, and the ability to tie your line of credit to the MMA.
Try: Visit Bank of America to learn about their Business Investment Account (MMA), which was designed to complement your business checking account. This MMA offers a business deposit card so your employees can make deposits (but not withdrawals, as with an ATM card).

Find FDIC-insured institutions

Regardless of the interest rate offered, if a bank's accounts are not insured by the Federal Department Insurance Corporation (FDIC) - which guarantees checking/savings accounts in member banks up to $100,000 per depositor – then your money isn't safe.
Try: Check out FDIC-insured Wachovia, which offers a Money Market "Sweeps" account. Each day, excess balances in $1,000 increments, above a target amount, are "swept" from your business checking account into your business MMA.

Federal regulations limit all money market accounts to a maximum of six pre-authorized withdrawals per month.
A monthly fee can be charged if a minimum balance is not met, or if you exceed withdrawal or other limitations.
Make sure you understand your MMA's regulations, penalties, and fees, so your business isn't nickel-and-dimed to death.
Often the best rates require bigger minimum balances.