Money market accounts, or MMAs, are deposit accounts insured by the FDIC or NCUA. They often come with a debit card and typically offer higher rates than savings accounts.
What is a money market account?
Money market accounts combine the features of checking and savings accounts and are often designed for individuals with large balances.
The advantage of a money market account is that it earns interest like a standard savings account but also includes a debit card and/or checks, similar to a checking account. The average interest rate on MMAs is 0.64% — higher than the average 0.46% rate for savings, as reported by the FDIC. (1)
Just keep in mind that many MMAs require large opening deposits and minimum balances to earn interest. Also, MMAs often have transaction limits, usually restricting you to six withdrawals or transactions per month, similar to a savings account.
Are money market accounts worth it?
They definitely can be — if you find one with low monthly fees and reasonable requirements. And if it has a high interest rate, it can be a great low-risk, short-term savings vehicle to park your cash.
But know that many MMAs have minimum balance requirements.
For example, the EverBank Performance Money Market account earns 4.00% APY with a minimum balance requirement of $50,000.
There are more flexible options, though. The Discover® Money Market account earns 3.80% APY for balances under $100,000 or 3.85% APY for balances over $100,000.
Discover® Money Market
Earn interest with a high-rate account while accessing your cash through ATMs, debit, or checks. Plus, enjoy no-fee withdrawals at over 60,000 ATMs nationwide.
- $0 monthly fee
- 3.85% APY on balances of $100,000 and above
- 3.80% APY on balances between $1 to $99,999
- Easy cash access via ATM, debit or check
Money market pros and cons
MMAs have some impressive upsides, and the downsides are nearly the same as traditional savings accounts.
Pros:
- Earn interest. The main benefit of MMAs is you earn interest on your balance — just watch out for balance requirements and rate tiers.
- Debit card and checks. Many MMAs come with a debit card, and some may also offer checkwriting privileges.
- Higher APYs than savings. On average, money markets have higher rates than traditional savings accounts.
Cons:
- Opening requirements. Many MMAs require an opening deposit, which could be a few hundred dollars, depending on the account and bank.
- Balance requirements. To earn interest, you may need to meet the account’s minimum balance requirements — though there are plenty of accounts without those stipulations.
- Limited transactions. Similar to savings accounts, some MMAs only allow up to six withdrawals per statement cycle.
How to open a money market account
Follow these steps to open your very own money market savings account:
- Compare money market accounts to find one that’s right for you.
- Visit the provider’s website to check whether you can apply online or if you’ll need to call or visit a local branch.
- Gather all required documents, including your Social Security number, government-issued photo ID and personal information.
- Apply for your account.
- Fund your new account with a linked bank account, wire transfer, ACH transfer or money order.
Compare top money market accounts
Narrow down top money market accounts by APY, monthly fees and more. For a closer comparison, tick the Compare box on multiple options to see benefits side by side.
Bottom line
Money markets are great if you want easy access to your savings, and they may be a suitable place for storing your emergency fund.
But if they’re not quite your thing or you’d rather avoid opening deposit or balance requirements, there are also interest-bearing checking accounts and high-yield savings accounts to check out.
Alternatively, if you want a deposit account that “locks” your funds away, you can also compare certificates of deposit.
Frequently asked questions
Are money market accounts safe?
Yes. As long as the institution holding your funds is FDIC- or NCUA-insured, your money is protected up to $250,000. Some banks offer more protection, such as SoFi’s Checking and Savings account, which protects funds up to $2 million through a network of program banks.
What’s the average rate on a money market account?
The national average interest rate for money market accounts is 0.64%, according to the Federal Reserve. However, some high-yield money market accounts offer rates as high as 5% APY.
Can you withdraw money from a money market account?
Yes, MMAs allow for withdrawals, unlike CDs, which typically penalize you for withdrawing funds before the term ends. Just remember that some banks only allow up to six withdrawals per month for savings or money market accounts.
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