Think of a money market account (MMA) as a blend between a checking and a savings account.
MMAs typically offer a higher interest rate than traditional savings accounts, and, depending on the bank, will allow quick access to funds via check writing, electronic funds transfer (EFT), and/or debit card or ATM withdrawals. We’ve found the best money market rates that are available on the market, which are outlined below.
Best Money Market Rates in December 2019
Interested in seeing how these rates compare to online savings accounts? See our roundup of best online savings account here.
Money Market Accounts vs. Other Account Types
Here are the key differences between MMAs, savings, and checking accounts:
|Account Type||Interest Rate||Key Features|
|Money Market Account (MMA)||High||You can write checks or make debit card purchases on the account, up to 6 times a month. This is the key difference between an MMA and savings or checking account. Depending on account, you could get a higher interest than a normal savings account. Some online banks will have savings accounts that are competitive with MMAs.|
|Savings Account||High||Online-only banks usually have very high interest rates (and are sometimes higher than money market accounts, depending on the bank). You cannot make purchases directly from a savings accounts, but you can quickly transfer money from a savings to a checking account.|
|Checking Account||Very low, or zero||This is your everyday spending account, which is usually linked to a debit card. A checking account is not designed to be a place to amass significant savings. Most checking accounts offer no interest, so your money will not grow.|
Before you open a money market account, make sure you at least have a checking account. A checking account is a basic necessity that everyone should have before they consider opening any other banking or investing account types.
Money Market Accounts (MMAs) at a Glance
- Usually, have higher interest rates than traditional savings or checking accounts
- May have higher minimum opening balances and maintenance balances
- Ability to withdraw up to six times per month
- May have fees for excess withdrawals or falling below minimums
Deposits and interest payments held in MMAs at FDIC-insured banks are covered by FDIC insurance. This means that if the bank fails for any reason, the federal government will reimburse your account balance (up to $250,000 per depositor, per FDIC-insured bank, per ownership category). MMAs held at credit unions are insured by the National Credit Union Administration, which is the equivalent of FDIC insurance for banks.
When to Consider Opening a Money Market Account
There are several instances where opening a money market account makes sense:
Saving up for a down payment: When you are putting money away to save towards a house, the combination of high interest, liquidity, and stability that comes with a money market account is ideal.
A place to park your emergency fund: Experts recommend having 3-6 months of living expenses saved up and tucked away in case something unexpected happens (ie, job loss, pay cut, car repairs, etc). A money market account provides quick access to your money and an appealing interest rate, which makes it perfect for an emergency fund.
Sinking funds for planned, irregular expenses: A sinking fund is used for any expense that you know is coming. Think of things like insurance payments, property taxes, vacations, holiday shopping, back-to-school shopping, etc.
What’s the Average Interest Rate for Money Market Accounts?
At the time of this writing, the national average annual percentage yield (APY) for money market accounts is 0.24%. This is according to a weekly survey of institutions done by Bankrate.
Despite the low national average, there are many banks that offer nearly ten times that much interest. Don’t just automatically sign up for your current bank’s MMA; be sure to shop around to make sure you are getting the best rate possible.
Keep in mind that interest rates can fluctuate often, which can increase or decrease your returns.
How DollarSprout Rates Money Market Accounts
The Editorial Team at DollarSprout looks at multiple factors when determining a 1-5 star rating for online savings accounts. Here are the most important factors that weigh into our ratings:
- Annual Percentage Yield (APY)
- Fees, and the likelihood that a user will incur them
- Account balance requirements
- Customer service
- Mobile app reviews
For money market accounts in particular, APY and fees play a heavier role in our ratings than other factors because they directly affect your bottom line. For other product categories (such as checking accounts, for instance), we may place an emphasis on other factors when determining a rating.
The star ratings are broken down into half-star increments, with 1 star being poor and 5 stars being excellent.