Money Market Accounts

MMAs have characteristics of regular share and share draft accounts.

  • An MMA earns dividends like a regular share account, although the dividend rate for an MMA may be higher than for regular shares

  • A member may be able to access their MMA account by debit card or electronic transfers

MMAs are considered savings deposit accounts under Reserve Requirements for Depository Institutions (Regulation D), specifically defined in CFPB regulation § 204.2(d)(2).

In April 2020, the Federal Reserve amended Regulation D to remove the six-per-month withdrawal limit for savings and MMAs. This limit was the basis for distinguishing between reservable transaction accounts and non-reservable savings deposits.

Credit unions may maintain this limit or set their own number of allowable transfers and withdrawals from savings deposits.

MMAs typically require a minimum balance (anywhere from $1,000 to $25,000) to earn dividends or avoid monthly fees. These accounts have no stated maturity date, and members can withdraw funds without penalty at any time, subject to any established withdrawal limit. Credit unions may offer higher dividends on higher balances in a member’s MMA.

A credit union’s board of directors will establish the terms and conditions for MMAs based on:

  • Current market dividend rates

  • Liquidity needs

  • Business plan

  • Members’ needs

Like other member share accounts, MMAs are recorded as liabilities on a credit union’s balance sheet under GAAP, and classified as equity by some state regulators.

Because MMAs are short-term, rate-sensitive, and sometimes high-balance, they are more unpredictable by nature. For example, when a credit union increases dividend rates, funds in MMAs may grow quickly. When it lowers dividend rates, funds may shrink quickly. In other words, MMAs are not usually considered core deposits, and could be considered a volatile funding source.

Credit unions that offer MMAs should have an effective ALM program to monitor and mitigate the risks MMAs can present (for example, IRR and liquidity risk). To maintain adequate liquidity, credit unions should consider balancing the amount in MMAs with shorter-term assets. For more information, see the Operating Liquidity section of the Examiner’s Guide.

Credit unions that offer MMAs must comply with all applicable laws and regulations, including:

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