A money market account is a type of savings account that earns interest but also provides check writing privileges. You can typically earn more interest with a money market account than with a traditional savings account, but money market accounts often require higher initial deposits or minimum balances. If neither of these requirements are an issue, a money market account can offer a safe way to grow your savings, while still offering access to your cash.
Quick look: The best money market accounts compared
Money market accounts, compared
|Bank||APY||Monthly fee||Minimum deposit required|
|First Internet Bank of Indiana||2.78%||$5||$100|
Note: The Annual percentage yields provided were collected from the issuing organizations’ websites and are valid as of Nov. 28, 2022.
- Min. deposit to open
A division of MidFirst Bank, Vio Bank is an online-only, privately owned bank based in Oklahoma City -- and it offers the highest APY on this list. With just $100, you can open an MMA at 3.52% APY, with interest compounding daily.
You won’t pay a monthly fee with Vio, unless you opt in for paper statements ($5 per month). The only other fee to worry about is a $10 excessive transaction fee per withdrawal if you go over your six withdrawal limit per statement period. Because Vio only offers savings products (including CDs and a savings account), if you’re looking to bring your checking, credit and savings accounts under one roof, Vio may not be the bank for you.
- Min. deposit to open
Sallie Mae is an FDIC-insured bank headquartered in Salt Lake City, primarily known for creating, servicing and collecting private student loans. However, Sallie Mae also offers a variety of savings accounts with higher than average APYs. With no monthly fees or a minimum deposit required to open the account, Sallie Mae offers a highly accessible money market account.
Sallie Mae’s money market account includes check-writing features and has no withdrawal limits. It also has a relatively high 3.20% APY, which compounds daily and is paid monthly. Keep in mind that Sallie Mae will close your account if it’s dormant, which is defined as having $100 or less and no activity for the past 12 months.
- Min. deposit to open
With more than 2 million customers and various checking, savings, investing and retirement accounts, Ally is one of the most popular online-only banks out there. Its money market account currently offers a 3.00% APY on all balance tiers, and Ally doesn’t charge monthly fees.
You don’t need an initial deposit to open the account, and you’ll have unlimited withdrawals if you can find one of Ally’s Allpoint ATMs (over 43,000 around the US). If you can’t find one of Ally’s ATMs, you can either transfer money to a checking or savings account with better ATM access or pay an out-of-network ATM fee, but Ally will reimburse you up to $10 per statement cycle for out-of-network ATM expenses. You can write checks from this account and also request a debit card for more accessibility.
- Min. deposit to open
Known for its above-average CD rates, the First Internet Bank of Indiana, another online-only bank, offers a wide array of financial products, including two checking accounts, a savings account and CDs at several terms. Its money market account offers a decent APY, earning more interest than its free savings account (2.78% compared to 0.80%, respectively).
You need $100 to open the money market account, and unless you can maintain an average daily balance of $4,000 in the account, there’s a $5 monthly maintenance fee, which can cut into your savings over time.
Still, this account offers an extra perk: It will reimburse you up to $10 every month for fees incurred from using an out-of-network ATM. First Internet Bank allows up to six withdrawals per month. That said, if you don’t need ATM access or want to withdraw from your account frequently, there are higher APYs available from high-yield savings accounts at other banks.
- Min. deposit to open
Our last pick on this list, CIT Bank -- an online-only bank that’s a subsidiary of First Citizens Bank -- has a 1.55% APY for its money market account, with no monthly fee. You only need $100 to open the account and it has suspended its withdrawal limit, so you can take cash out multiple times without penalty. CIT Bank also offers an eChecking account and several other financial products aimed at savings.
How to choose a money market account
There are several questions to answer when evaluating a money market account.
- What is the highest APY available?
- What options exist to access your account?
- What is the minimum balance requirement, and are there fees or penalties associated with balances dropping below that level?
- Are there any limitations on the number of transactions permitted each month?
The answers to these questions will help you narrow down a list of options. From that list, compare the features and select the best option to suit your needs.
Money market accounts compared to other deposit accounts
You can typically earn more interest with a money market account than with a traditional savings account, but money market accounts often require higher initial deposits or minimum balances. If neither of these requirements are an issue, a money market account can offer a safe way to grow your savings, while still offering access to your cash. They’re also particularly attractive now that APYs are starting to rise as a result of the Federal Reserve’s recent interest rate hikes.
High-yield savings accounts offer rates that can rival those available on money market accounts but they don’t generally have check-writing privileges, which are common with money market accounts. A certificate of deposit earns an APY that will vary based on the term. The longer-term CDs generally pay a higher APY than a money market account, but your access to the deposited money will be limited until the CD term reaches a maturity date. Withdrawing money before this time will cause an account holder to forfeit a portion of the interest earned. Money market mutual funds are sold via brokerages and investment firms. Money invested in these funds is not insured by the FDIC or NCUA, so investors can experience higher growth rates, but the money can be lost.
Pros and cons of opening a money market account
Balances can earn a competitive APY in a low-risk, secure savings account.
There are many options to choose from from traditional, online, and hybrid banks and credit unions.
Money market accounts provide check writing access to deposited funds. Money in the account can be accessed when you need it.
Balances are insured by the FDIC or NCUA up to $250,000 per person.
Interest rates on money market accounts are generally variable and can change at any time.
There are other low-risk savings options that pay higher interest rates on deposit accounts.
The number of transactions can be limited to six withdrawals a month.
When you should invest in an money market account
As a general rule of thumb, anything over a 1% APY for a money market account is considered a good rate. Money market accounts are great savings options when you don’t need constant access to money, but desire check writing privileges. You should also consider a money market account if you’re looking for a low-risk, interest-earning savings account that’s insured for balances up to $250,000.
How to open a savings account
Opening a money market account is a simple process.
1. Complete the application process at your chosen bank or credit union. Many financial institutions have features that allow you to complete the application process online.
2. Provide a government-issued form of ID to verify your identity.
3. Deposit at least the required minimum amount to fund your account.
Savings accounts and money market accounts are currently offering around the same APYs. (An annual percentage yield -- which is the rate of return earned on an investment, including compound interest -- is effectively your interest rate for the year.) For either account, anything beyond 1.00% is considered a robust interest rate. That noted, several online-only banks, including Bask and SoFi, are offering savings account APYs that are higher than money market accounts on this list (2.20% and 2.00%, respectively). And national banks such as Wells Fargo, Chase and Bank of America aren’t offering good interest rates on either their savings accounts or their money market accounts. If you’re looking for higher rates, you might be better off opening an account with an FDIC-insured online-only bank.
While savings accounts are more widely available than money market accounts, choosing between them does not need to be an either-or situation. For example, having multiple savings accounts could be a useful way to divide up your accounts based on your financial goals -- you can open one account to save up for college and another one for a home.
There could be an advantage, however, to having a savings account at a bank where you already have a checking account and lines of credit. With savings, checking and credit accounts under one roof, it’s easier to transfer funds (free of fees) between accounts. Also keep in mind that some banks don’t issue debit cards for money market accounts, so having accounts with one bank that you can easily move money between may be helpful.
Balances up to $250,000 are insured against bank loss or failure by the FDIC or NCUA. This makes a money market account a low-risk savings option
The fees charged by banks for money market accounts varies. Some banks don’t charge a monthly fee while others can charge fees unless your balance meets a minimum threshold. Money market accounts also typically charge a fee for excessive withdrawals if the number of withdrawals exceeds six per month.
Yes, interest earned on money deposited in your money market account is taxable at your current tax rate.
Online checking accounts can also be insured by either the FDIC or NCUA up to $250,000. Online security is also a major concern for any banking institution. You should verify the security protocol for any institution you’re considering. Safeguarding your digital devices with passwords or biometric security features will also help protect your account access.
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