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.
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 0.61% — higher than the average 0.45% 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.
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.
MMAs have some impressive upsides, and the downsides are nearly the same as traditional savings accounts.
Follow these steps to open your very own money market savings account:
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.
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.
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.
The national average interest rate for money market accounts is 0.61%, according to the Federal Reserve. However, some high-yield money market accounts offer rates as high as 5% APY.
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.
Find the best money market rates in 2023 with American First Credit Union, Ponce Bank, Patriot Bank, FVCbank and more.
