What is a money market account? (2024)

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• A money market account is an interest-earning bank account.
• Both money market and high-yield savings accounts earn high interest rates.
• Both types of accounts limit withdrawals and transfers to six times per statement cycle.

A money market account is an interest-earning bank account available at many banks and credit unions that may be used for storing savings. Like high-yield savings accounts, they are a popular and expert-recommended vehicle for storing cash you'll need in the short-term.

The best money market accounts offer a strong interest rate with easy access to your money, good customer service, and low or no monthly service fees.

Money market accounts usually have the following features:

• A variable interest rate: The interest rate of a money market account may fluctuate depending on what the Federal Reserve does. If you'd prefer to maintain the same interest rate for a period of time, banks or credit unions offer CDs.
• Debit card/ATM card: Money market accounts often come with a debit card or ATM card. It's important to note that if you open a traditional savings account, most financial institutions won't offer cards with the account.
• Check writing privileges: Most banks only provide checks for money market accounts or checking accounts.

Money market account vs. savings account

Money market accounts are a type of savings account. Both types of accounts typically come with low or zero monthly fees; pay similar interest rates; and are FDIC insured up to $250,000.

In fact, there's no real difference in the function of a money market and high-yield savings accounts, according to financial adviser Ric Edelman. "It's merely marketing schtick," he says.

Regardless of the bank or credit union, both money market and high-yield savings accounts are subject to the federally mandated limit of six withdrawals or transfers per statement cycle, which includes bill pay, transfers to another bank account, cash withdrawals, and, for some money market accounts, debit purchases and checks.

The clearest difference between the two types of accounts is the debit card and check-writing capabilities that come with some money market accounts. High-yield savings accounts can only be accessed online or through a bank branch.

Why would you use a money-market account?

You would use a money-market account to save easily accessible cash — the same reason you'd use a savings account. Choose a money-market account to get checks or a debit card, and if you have enough to meet the minimum opening deposit requirements.

You'll probably prefer a money market account if you want easier access to your savings. Unlike savings accounts, money market accounts typically come with paper checks or a debit card. (Or both!) This can be especially useful for storing your emergency fund, because you can have instant access to your cash, instead of waiting for money to transfer from a savings account to another account.

You might choose a high-yield savings account if you don't have much money to get started. Most online high-yield savings accounts don't have any minimum opening deposit requirement. But many money market accounts ask for hundreds or even thousands to open an account.

There are a few money market accounts out there that don't require much to get started, though. So if you're dead set on getting paper checks or a debit card but don't have money for a big opening deposit, don't throw in the towel just yet.

Your choice may come down to how much each account pays in interest. Rates can fluctuate after you open an account, so the rate probably shouldn't be the only reason you choose one or the other.

And remember — you don't necessarily have to choose between the two. There's nothing stopping you from opening both a money market account and a high-yield savings account if you want to. They're both strong savings tools.