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What Is a Money Market Account?

Money market accounts pay rates similar to savings accounts and have some checking features.
Nov. 15, 2019
Banking, Savings Accounts
What Is a Money Market Account?
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What is a money market account?

A money market account is a savings account with some checking features. They typically come with checks or a debit card and allow a limited number of transactions each month. Traditionally, they’ve also offered higher interest rates than regular savings accounts. But these days, their rates are similar. And money markets often have higher minimum deposit or balance requirements than savings accounts, so compare your options before picking a money market.

Money market accounts are insured by the Federal Deposit Insurance Corp. (at banks) and the National Credit Union Administration (at credit unions), so you won’t lose your deposits even if your financial institution goes out of business.

» Want to compare rates? See our roundup of the best money market accounts.

What are the pros and cons of money market accounts? Are money market accounts worth it?

Is a money market account worth it? That depends. If you’re considering one, keep these pluses and minuses in mind.

Pros

  • Receive some of your bank’s best rates.
  • Access funds more easily than with most savings accounts, which might be helpful in an emergency.
  • Have a safe place to keep a large chunk of money, protected by FDIC insurance.

CONS

  • Funds might be too easy to spend.
  • Some accounts require high minimum balances to open or avoid fees.
  • In many cases, savings accounts pay just as much interest.

If your bank pays similar rates on its standard savings account and its money market, it might be worth sticking with the savings account. You’re more likely to avoid high minimum balance requirements, and both accounts are insured. But if the money market’s rate is higher and you can afford the minimum, it’s generally a good idea to sign up.

compare money markets and savings accounts




NerdWallet bank rating:


Money Market Account


NerdWallet bank rating:


360 Performance Savings Account

 NerdWallet bank rating:


Savings Account

APY



1.55%





Monthly fees



$0





Minimum deposit



$2,500


APY



1.70%





Monthly fees



$0





Minimum deposit



$0



APY



1.70%





Monthly fees



$0





Minimum deposit



$0



See more high-yield savings accounts

How to choose a money market account

If you decide a money market account is your best option, look for one with a high interest rate and no monthly fee. It also should have a reasonable minimum balance. Some institutions require $10,000 or more to open an account.

Look for a money market account with the best rates and no monthly fees. It also should have a reasonable minimum balance.

For more help, read our expert reviews of the best money market account rates. These institutions all pay solid rates, and you’ll even find one account with a $100 minimum balance.

» Compare a wider range of money market accounts by entering your ZIP code and a minimum deposit to get the best money market rates.

Money market accounts vs. other accounts

Money market accounts have features that overlap those of other bank accounts, but there are important differences. Consider how they compare to other savings accounts:

Type of accountHow is the interest rate?Why open this account?
Money market accountCompetitive with savings account rates
  • May pay a better interest rate than a regular savings account.
  • Typically offers the ability to write checks or make debit card purchases on the account (up to 6 times a month without penalty).
Savings accountCompetitive with money market account rates
  • Interest rates can be similar to those of a money market account.
  • Usually requires a lower minimum opening deposit and lower balance requirements than a money market.
  • Read more about savings accounts with top yields.
Certificates of deposit (CDs)Generally highest of all bank accounts
  • You have a chunk of money you won’t need for months or years.

  • You want higher interest rates, without the risk of investing in the equity markets. (Learn more about how timing and risk tolerance should determine where you put your money.)
  • Read more about the best CD rates by month.
Type of accountWhy open this account?
Money market account
  • May pay a better interest rate than a regular savings account.
  • Typically offers the ability to write checks or make debit card purchases on the account (up to 6 times a month without penalty).
Savings account
  • Interest rates can be similar to those of a money market account.
  • Usually requires a lower minimum opening deposit and lower balance requirements than a money market.
  • Read more about savings accounts with top yields.
Certificates of deposit (CDs)
  • You have a chunk of money you won’t need for months or years.

  • You want higher interest rates, without the risk of investing in the equity markets. (Learn more about how timing and risk tolerance should determine where you put your money.)
  • Read more about the best CD rates by month.

Money market accounts also have crucial differences from other types of bank accounts:

  • A money market account is not a money market fund, an investment that could lose value if the market falls. Money market accounts are backed by the FDIC or NCUA, up to $250,000 per depositor.
  • A money market account is not a checking account. Some money market accounts have check-writing and debit card features. But, as with regular savings accounts, they are limited by the Federal Reserve to six “convenient” transfers or withdrawals a month — including by check, debit card swipe or online transfer. If you want the ability to write checks and make frequent withdrawals, you may be better off opening an interest-bearing checking account. (You can look for high-interest accounts by entering your ZIP code and minimum deposit in our interest checking tool.)

» Want to learn more about investing in the stock market? Check out our guide for beginners.