A money market account gives you the flexibility of a checking account, with the high returns of a high-yield savings account, making it a perfect way to earmark money for saving goals if you don't want to tie up your money in CDs.
Money market accounts differ from traditional savings accounts in that they allow check-writing privileges and a debit card. You can use the debit card for ATM withdrawals and other purchases.
They also offer a higher level of liquidity that you likely won't find in other high-yield savings accounts. The APY of a money market account includes compounding interest, which is usually credited monthly.
Top money market accounts right now
Here are some of the best money market accounts. All are FDIC-insured banks or NCUA credit unions, letting you keep your savings safe:
Account |
APY |
Min. Opening Deposit |
|---|---|---|
4.00% |
$100 |
|
4.00% |
$1,000 |
|
3.80% |
$1,000 |
|
3.85% |
$1 |
|
3.70% |
$100 |
|
3.50% |
$50 |
Pros of a money market account:
Some of the benefits:
- They offer higher interest rates than a traditional savings account
- You gain more access to your cash through debit card and check-writing capabilities
- Money market accounts are safe ways to grow your cash, as most are FDIC or NCUA-insured.
Use this tool to compare some of today's top savings options fast:
Cons of a money market account
Keep these things in mind before opening a money market account:
- Many banks require a minimum deposit to open an account, and have minimum balance requirements, as well
- The return on money market accounts can be lower historically than investing your money in the stock market
- The interest rate on money market accounts is variable, meaning that if the Federal Reserve cuts interest rates again, your money market rate could drop
- Having easy access to savings can encourage some to spend more than they ought
Who benefits the most from money market accounts?
These accounts work best for savers who have an emergency fund established and need fluid savings goals. This could include a home improvement project, reallocating investments as you approach retirement or saving for a vacation.
If you have a goal longer than a year and don't need regular cash access, it's advisable to consider a certificate of deposit since they offer fixed interest rates. It will protect your earnings from future rate cuts. Just know that term-based CDs come with early termination fees, so if you need the money for any reason, you'll lose some earnings.
The other thing to keep in mind is how often you'll need to access the money. If you need regular cash access, a high-yield savings account might be a better solution. You can earn comparable rates without any transaction limits.
How money market accounts help you reach your goals
Money market accounts offer high APYs and cash flexibility, making them perfect for savers with shorter-term savings goals. Just be mindful of any minimum balance requirements and transaction limits before opening one.
Overall, they're among the most versatile savings solutions available, even with these considerations.
