Money market accounts vs. money market funds

High minimums and account accessibility help separate this savings account and mutual fund.

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Money market accounts are savings accounts with high minimums while money market funds are mutual fund investments with no guarantee of return. Compare these banking and investment tools by learning what features separate money market accounts from money market funds.

What’s the difference between a money market account and a money market fund?

Money market accounts and money market funds offer the opportunity to earn, but each account has its own set of defining characteristics:

Money market accountMoney market fund
AboutHigh-yield savings account with limited transactions and steep minimumsHighly accessible mutual fund with fluctuating returns
Checking-writingLimitedUnlimited
ReturnsSteadyFluctuate
FDIC-insuredYesNo
Minimum depositUp to $25,000Up to $5,000
Six-transaction limitYes No

Pros and cons of money market accounts vs. money market funds

Money market accounts

Pros
  • High rates. Money market accounts typically offer higher rates than regular savings accounts.
  • FDIC-insured. Funds are insured by the FDIC for up to $250,000.
  • Check-writing privileges. Some money market accounts come with limited check-writing privileges.
Cons
  • Limited transactions. Since money market accounts are a type of savings account, transactions are limited to six withdrawals monthly, with fees or penalties for going over.
  • High minimums. You’ll need to deposit a minimum of $2,500 to $10,000 to tap into the higher rates money market accounts offer.

Money market funds

Pros
  • Low minimums. Minimum opening deposits for money market funds are typically lower than money market account minimums.
  • Accessible funds. Money market funds come with check-writing privileges and don’t have the same monthly transaction limits as money market accounts. You’re also free to buy or sell your shares at any time.
  • Tax benefits. Taxable money market funds are common, but lower yield tax-free options are also available.
Cons
  • Potential for loss. Returns from these funds depend on fluctuating market rates, so it’s possible for money market funds to lose value.
  • Not FDIC-insured. A money market fund may not be for you if you want your funds insured.

Compare top-rated accounts

Name Product Interest rate (APY) Fee Minimum deposit to open
1.50%
$15 per month
(can be waived)
$25
Earn one of the highest annual percentage yields (APYs) if you live in one of 42 eligible states, and access your money by ATM, check or bill pay.
1.85%
$0
$100
A super-high interest rate if you're in the habit of saving at least $100 per month or have $25K in the bank. Earn up to $300 Cash Bonus with a $50K deposit. Open to both current and new customers. Conditions apply
2.00%
$10 per month
(can be waived)
$5,000
Enjoy the security and earning potential of a savings account while maintaining the flexibility to write checks.
0.30%
$25 per month
(can be waived)
$25,000
This money market account includes an ATM card and a 24-hour overdraft grace period.
1.85%
$0
$100
A savings account with a higher-than-average rate and minimal fees.
1.66%
$0
$5
With no fees and a high interest rate, this account gives you plenty of incentive to save.

Compare up to 4 providers

Name Product Available asset types Stock trade fee Option trade fee Annual fee
Stocks
Bonds
Options
Mutual funds
ETFs
Forex
Cash
$0.01 per share
($3 minimum)
$3 + $0.75/contract
0%
Trade stocks, options and ETFs for as low as $1 per order for a year when you open a new account by December 31, 2019, and fund it with $2,500 or more within 60 days.
Stocks
Bonds
Options
Mutual funds
ETFs
Forex
Futures
$4.95
or $3.95 with a $100,000 average daily balance or 30+ trades over a rolling 3-month period
$4.95 + $0.65/contract
or $3.95 + $0.50/contract with a $100,000 average daily balance or 30+ trades over a rolling 3-month period
0%
500+ commission-free ETFs, some of the industry's lowest fees plus a cash bonus up to $3,500.
Stocks
Bonds
Mutual funds
ETFs
$2.95
0%
100+ commission-free online stock and ETF trades with $0 minimum to start. Just $2.95 per trade thereafter.
INVESTMENT PRODUCTS: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
Stocks
Options
Mutual funds
ETFs
$0
$0
0%
Firstrade customizable trading platforms let you manage your account and trade from your desktop, iPad or mobile phone.
Stocks
Bonds
Mutual funds
ETFs
Your personalized financial plan will help you find out how much you’ll need every month in retirement, what type of insurance you need to protect your family and realistic ways to save and invest.
Stocks
Bonds
Options
Mutual funds
Facet Wealth flat fee model allows them to deliver an affordable Facet Financial Life Plan and create greater access for families that are just starting—or with assets in retirement plans

Compare up to 4 providers

How to compare money market accounts and money market funds

Compare the following elements to decide which investment is best for you:

  • Interest. Are you looking to safely park your cash or earn interest? Money market accounts tend to have higher yields than money market funds, so explore your options in both arenas before you make a decision.
  • Deposit requirements. To open a money market account or money market fund, you’ll need a minimum opening deposit. Money market funds typically have lower minimums up to $5,000 while money market account minimum deposits can be as high as $25,000.
  • Fees. You may encounter monthly maintenance and ATM fees when you open a money market account. On the other hand, money market funds may impose trade fees. Ask your provider about fees associated with the account you’d like to open and how to avoid them.
  • Accessibility. How often do you want to tap into your funds? Like savings accounts, money market accounts are typically limited to six transfers monthly and many providers impose excessive transaction fees for surpassing this limit. Conversely, money market funds tend to offer more account accessibility with unlimited withdrawals, transfers and check-writing privileges.

Bottom line

These accounts may share a similar name, but both offer a unique earning opportunity with discerning features and drawbacks. Money market accounts have high minimums and rates but limited accessibility. And money market funds have fluctuating returns coupled with low minimums and fees.

Review your account options with multiple providers before you make a decision.

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