high-yield savings account authorized by the Garn-st.Germain Depository Institutions Act of 1982 to allow depository financial institutions to be fully competitive with money market mutual funds in attracting consumer deposits. The MMDA also called a "money market account," pays a market rate of interest with no regulatory limit so long as the account balance stays above $1,000. When the balance drops below $1,000, the MMDA pays the same rate of interest as a Negotiable Order Of Withdrawal (NOW) account.
Banks and savings institutions have the right to require a seven-day notice of withdrawal before approving withdrawals or transfers, but most have waived this requirement. Consequently, MMDA accounts are considered liquid assets, paying rates competitive with money market mutual funds, even though individual bank rates will vary, depending on active financial institutions competing in a given market.
