Money Market Accounts and Rates
A money market account (MMA) is an FDIC-insured bank account that pays higher rates than a savings account with the accessibility of a checking account.
Money Market Accounts and Rates
The best high-yield money market accounts offer check-writing capabilities, debit cards, or both — and have little or no minimum balance requirements. Explore our picks for the best money market accounts below.
Money Market or High Yield Savings?
Money market accounts and high-yield savings accounts can often be confused together. For good reason: they are very similar. In short, money market accounts give you a little more flexibility with your money. Meanwhile, high-yield savings accounts typically pay higher rates, carry fewer fees and have either no minimum balances or lower minimum balances. If you’re checking out money market accounts, it’s worth comparing what you can get from high-yield savings.
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What is a money market account?
A money market account is a deposit account that shares some features of checking and savings accounts. Most banks offer this type of account. Money market rates are comparable to those found with savings accounts, with the best offering 0.50% APY or higher.
Unlike most savings accounts, money market accounts often come with checking and debit cards for direct fund withdrawals. Money market accounts are also FDIC insured, so your money is protected up to $250,000 per person in the event of a bank failure.
How to choose the best money market account
If you’re interested in opening a money market account, you’ll want to be sure to choose the right one. Here’s what you should look for:
money market
- FDIC insurance: This protects your money in case your bank goes under. Most money market accounts have this.
- High APY: Look for an annual percentage yield (APY) that’s close to the highest money market rates, but don’t worry about choosing the highest-yield money market account. Banks change their rates and the best options can shift over time.
- Debit card: Some accounts include a debit card in case you’d like to withdraw cash directly or use your money market account funds to buy things.
- Check-writing capabilities: Some money market accounts come with check-writing capabilities instead of or in addition to a debit card. Look for an account that has this if you want to write checks directly from the account.
- Branch locations: If you prefer to bank in person, open a money market account at a bank that has branches near you. Withdrawing funds from your money market account in person does not count toward your monthly withdrawal limits, so it’s a way to take out more money without incurring extra fees.
- ATM locations: If your money market account has a debit card, check where your nearest fee-free ATMs are and whether your bank charges fees for using an out-of-network ATM. The best banks may reimburse you for some out-of-network ATM fees each month.
- Balance requirements: Check if your bank has a minimum initial deposit requirement or ongoing balance requirements, and if so, make sure you are able to meet them.
Who should open a money market account?
Money market accounts are a good idea when you:
- Want to earn interest on your savings
- Want convenient withdrawals from your bank account (withdrawing from a savings account can be a bit of a hassle)
A high-yield money market account allows you to earn money on your money. It also sidesteps the biggest problem of a savings account: With a savings account, you cannot usually withdraw funds directly. Instead, you have to transfer funds to a checking account first. Money market accounts, on the other hand, let you take out cash directly. Money market accounts also generally offer a debit card or checks (and some accounts offer both).
money market account
They’re not a great replacement for a checking account, unless you rarely withdraw funds. But a money market account could replace your savings account if you wanted it to. Both money market accounts and savings accounts are subject to Regulation D, which limits you to six withdrawals per month and charges you extra for exceeding these limits. In response to the pandemic, the government waived this rule in 2020, but individual banks still restrict the number of monthly transactions you can make.
Money market terms to know
Here are some common terms used when discussing money market accounts and rates:
- Annual percentage yield (APY): The APY is an annualized representation of the account’s interest rate. APY stands for “annual percentage yield.” People often use this term interchangeably with interest rate, but the two aren’t the same. APY takes into account the actual interest rate as well as how often that interest compounds. A higher APY means more interest for you. APYs on money market accounts are subject to change at any time.
- Minimum balance: Some money market accounts require a minimum deposit to open the account or to avoid monthly maintenance fees. These minimum balance requirements can be higher than the requirements for savings accounts.
- Transaction limits: Money market accounts may be subject to restrictions on the number of convenient withdrawals you can make without incurring additional fees. Convenient withdrawals include electronic transfers, most check withdrawals, and online bill pay, but do not include things like withdrawals made at a branch location or cash taken out at an ATM.
Alternatives to money market accounts
If you don’t think a money market account is a good fit for you, here are some other options worth considering.
market accounts
Savings account
A savings account is another type of deposit account that offers a similar APY to a money market account but has more restrictions on accessing funds. You’re limited to six savings account withdrawals per month if you’d like to avoid fees, and most savings accounts lack check-writing capabilities or debit cards. But savings accounts tend to have lower minimum balance requirements than money market accounts, and some may not have minimum balance requirements at all.
To learn more: Check out our picks for the best savings accounts.
CD
A CD is another type of deposit account (CD stands for “certificate of deposit”). These can have APYs comparable to or even higher than money market account rates. In exchange for these higher rates, you have to pay a penalty if you withdraw your funds before the full length of the CD term. CD terms can range from a month to 10 years, with most falling in the six-month to five-year range.
They can be a great place for savings you don’t intend to use anytime soon, but you have to consider what interest rates are doing. CD rates are typically locked in for the full term length, which is great when rates are dropping but bad when they are climbing.
You can check out our top picks for the best CD rates below:
- Best 6-Month CD Rates
- Best 12-Month CD Rates
- Best 3-Year CD Rates
- Best 4-Year CD Rates
- Best 5-Year CD Rates