A money market account allows you to get a higher interest rate on your savings without risking your balance. It’s an ideal place to leave your emergency fund, a down payment for a home, or a sum of cash that requires easy access.
When choosing a money market account, read the fine print. Make sure that the advertised interest rate is available for your entire balance. There shouldn’t be any monthly maintenance fees or complicated hoops to jump through to get any perks associated with the account, either. Confirm that you’ll be able to easily move money in and out of the account. Not every money market account offers same-day transfers.
Best Money Market Accounts
CIT Bank’s money market account offers 0.75% interest on your entire balance. You can deposit checks remotely or transfer money in and out of the account using the CIT Bank mobile app.
With Nationwide, you must keep a minimum of $1,000 in your account to avoid monthly fees. While many money market accounts don’t impose fees not matter how low your balance goes, they may not pay interest rates that are as high as the money market account with Nationwide.
Axos requires a minimum daily average balance of $1,000 to waive the monthly maintenance fees. You’ll get access to virtual financial assistance via the app’s assistant, Evo. The app also allows users to deactivate and reactivate the connected debit card any time.
Discover offers a wide variety of financial tools, including a money market account. This no-frills account comes with 24/7 access to live customer service.
Marcus is an online-only bank that’s growing in popularity. It’s operated by Goldman Sachs. You’ll have easy access to your money with same-day transfers up to $100,000 to and from other banks.
Barclays is a traditional bank with a straightforward money market account option. There are no monthly fees or minimum to worry about. While this isn’t the account that pays the most interest, if you have other accounts with Barclays, it may make sense to use their money market account to make it easy to move money.
The BMO Harris money market account has a tiered interest rate that jumps to 0.100% APY when your balance reaches $25,000. You won’t earn any interest on balances under $5,000. If you have at least $25,000 to put into the account, BMO Harris has one of the highest interest rates among money market account.
Capital One 360
Capital One is best known for its credit cards, but this online bank also offers a variety of accounts. Their money market account doesn’t have any monthly fees and doesn’t require a minimum opening amount. It doesn’t offer the highest interest rate, but if you bank with Capital One and use their credit cards, having a money market account that’s so easy to connect to your other banking products could be an important advantage.
Still have questions about the best money market accounts? FAQs
What is a money market account?
A money market account is a lot like a savings account, but you can write checks and use a debit car to access the money. The Federal Reserve considers a money market account a deposit account, so transfers and withdrawals are limite to six each month. Using an ATM or bank teller to get cash don’t count towards those six withdrawals.
While you may earn a higher interest rate with a money market account than you would with a regular savings account, you may also have to maintain a minimum balance.
What are some advantages of having a money market account?
You’ll earn more interest with a money market account than you can with most savings accounts. On average, savings accounts pay around 0.08% APY. So, if you have more than a few hundred dollars set aside for emergencies or are saving for a long-term goal like buying a car or a mortgage down payment, a money market account can help you earn more money.
You can write checks with a money market account. Most banks also offer a free debit card with this type of account to make accessing your money easier.
What are some disadvantages of having a money market account?
Many money banks require a minimum balance to avoid monthly maintenance fees. You’ll be limited to just six electronic transactions per month, as well. Not all money market accounts pay equally high interest rates. In fact, many banks offer lackluster money market account options with monthly fees that would quickly cancel out any interest rate earnings. If you decide to open a money market account, shop around and carefully compare your options.
How much interest can you earn with a money market account?
Depending on how much money you leave in your account, you could earn a lot more interest with a money market account than with a traditional savings or checking account. Here’s how the money market accounts mentioned here stack up with a $10,000 balance:
|Bank||Interest rate||Interest earned after 5 years||Interest earned after 10 years|
|BMO Harris||0.50% APY||$252||$511|
|Capital One||0.50% APY||$252||$511|
Why use a money market account instead of investing the money?
While investing your savings in stocks or another traditional investment is a smart way to help your money grow faster than it would in a money market account, there is also some risk associated with investing. You could lose some of your initial investment when the stock market dips. Since returns aren’t guaranteed with investing, parking your hard-earned cash in a money market account is a great way to protect your money while earning interest.
Even if you are OK with the risk associated with investing, you may not be able to access money you invest as quickly as you could get a hold of cash you keep in a money market fund.
What’s the difference between a money market account a money market fund?
A money market fund is an investment that doesn’t have the benefit of FDIC insurance. You can lose money with a money market fund. The interest rate fluctuates over time with the financial markets. Although you could earn a lot more money with a money market fund, this financial tool is completely different from a money market account.
A money market account is a safe place to park your money. It’s FDIC insured. You’ll know the interest rate upfront, before you make your initial deposit. A money market account is more like a savings account than an investment tool.
What’s the difference between a money market account and a CD?
A CD also earns higher interest than a savings account, but there are restrictions on when you can access your money once you deposit it into a CD. If you withdraw your money from a CD before its maturity date, you could be subject to penalties. You may not earn as much interest as you expect if you make early withdrawals from your CD, either.
You can’t write checks or use a debit card to access the money in your CD. A CD is designed to offer a higher interest rate than a savings account and is best for people who know they won’t need to access the money until the CD’s maturity date. If you know you’ll need quick access to your cash, it’s best to put it into a money market account instead of a CD.
The bottom line
If you have money that you’d like to keep separate from your regular household budget, are saving for a specific reason, or are simply looking for a safe and accessible place to park your emergency fund, a money market account is an ideal solution.
Compared to savings accounts and CDs a money market account offers more flexible transaction options, higher interest payouts, and liquidity. Not all money market accounts are the same, however. Interest rates vary widely. Ideally, you’ll be able to find a bank that offers a money market account with a competitive interest rate, zero monthly maintenance fees, and perks like a free debit card, access to a wide network of fee-free ATMs, and free check writing privileges.