Best Money Market Accounts
Based on In-Depth Reviews

What is a Money Market Account?

A money market account is a type of savings tool — a convenient and safe method to save money.  

MMAs are often described as a happy medium between a savings account and a checking account because account holders usually have easier access to their funds through checks and/or ATM cards (as with a checking account), while simultaneously earning interest on their balance (as with a savings account). 

As Dr. Kurt Schindler, a finance professor at the University of Puerto Rico, told us: money market accounts should not be considered “long-term,” but are instead a good savings tool for “parking” funds temporarily. We elaborate on the uses of MMAs further below.

Key Factors

When considering whether or not to open and use an MMA, there are several important factors to compare and contrast. 

• APY: The annual percentage yield refers to the rate of return after the interest and compounding rates are taken into account. Plainly put, if different institutions are using the same interest rate but compounding it differently, the final annual result (i.e. yield) will be different too. Instead of making consumers have to figure it out by calculating different interest rates at different compounding periods, the APY rate tells exactly what the yield will be at the end of the year.

As this graphic shows, however, interest rates don’t quite make much of an impact on a person’s balance. APY differences typically manifest in a difference of a couple of pennies to a couple of dollars. APYs of 0.85% versus 1.90% are very different from each other, but an APY of 1.85% versus one of 1.90% is not going to make much comparative difference. 

• Fees: The true determining factor when comparing money market accounts is the fees. These include maintenance fees — essentially, penalties for low account balances — and transaction fees — the costs of sending and receiving funds through various means. When evaluating different institutions, all our interviewed experts emphasized the importance of fees. 

Gerri Walsh, president of the Financial Industry Regulatory Authority (FINRA) warns consumers to: 

• Withdrawal Limits: The Federal Reserve Board is the governing body of the Federal Reserve System (a.k.a. The Fed) — the central bank of the United States. One of their regulations (Regulation D, §204.2(d)(2)) establishes that a bank’s customers can only make a maximum of 6 withdrawals “per calendar month or statement cycle (or similar period) of at least four weeks.” 

The reason for this is that, unlike with a checking account, funds in savings and money market accounts are not kept in their entirety by the bank. Instead, these funds are used to make other investments as well as to offer loans or mortgages to other customers. Only a small percentage of the money in customers’ savings and money market accounts is actually kept in the institution’s accounts. For this reason, there are federally imposed restrictions.

Nonetheless, customers can get around this withdrawal limit through a number of ways, depending on the banking institution. These include making one single large withdrawal to a checking account to pay various bills, ensuring the balance is never in overdraft, and immediately contacting the bank if a potential seventh withdrawal has been made.

In addition, some institutions allow for unlimited withdrawals to be made from automatic teller machines (ATMs) or in person at a branch, although these are often limited to $1,000 per day. These are known as “inconvenient” withdrawals.

What are Money Market Accounts for?

Money market accounts are not considered a long-term investment because they have relatively low returns — even in the long-run. Instead, as one of our experts told us, it’s a good tool for “parking your money.” In other words, MMAs are good for building up savings that can be withdrawn quickly thanks to their high liquidity. 

This makes them ideal for a variety of situations:

Emergency funds: One of our experts, retired bank manager Nereida Ortiz who has over 40 years' worth of experience in baking and finance, told us:

“[You should have] an emergency fund that covers things like auto-repairs or any other necessities that could arise as well as 3 to 6 months of salary saved up in case you become unemployed. You should be able to pay your obligations until you can find employment again.”

Money market accounts are a great way to build up an emergency fund because many have no minimum balances (so account holders can start from scratch and build it at whatever pace works best for them), it offers more returns on the funds than a checking account (even though the interest rates are relatively low), and the money can usually be withdrawn at any time (provided the 6-withdrawals limit has not been reached) in the event of an emergency.

Vacation or Special-Occasion Funds: Once monthly obligations are met — paying rent, utilities, groceries, loans, mortgages, gas, etcetera — and a set amount has been contributed to the emergency fund, it can be a good idea to put money for specific special occasions like vacations or Christmas gifts in an MMA instead of keeping it in a checking account. That way the money is safe from the temptation to withdraw it prematurely and it’s allowed to accrue some interest. 

Building up to a CD: This is applicable to other financial instruments and investment tools as well. Starting to save can seem like a very daunting project at first, especially with accounts like CDs that can have seemingly unattainable balance minimum requirements and which lock funds until they reach a specific maturity date. 

MMAs are a great solution to this because they usually have very low-to-no minimum balance requirements, which means consumers of all stratas and incomes can use them, saving a little each month according to their means. Once a certain desired amount is saved up and it’s evident that the funds don’t need to be touched right away, they can be put into a CD for 6 months or a year.

Retirement tools: MMAs are not typically recommended as retirement tools because of their low returns and ease of access (which can get in the way of saving). Nonetheless, MMAs can be used to build up funds that will later be used to open or invest in other types of retirement vehicles like IRAs.

FDIC and NCUA Insured

Money market accounts are a particularly safe investment and a great saving tool because the funds are insured — i.e., protected against catastrophe. In the event of a bank failure — the inability of a bank to meet its obligations, like having enough liquid assets — the Federal Deposit Insurance Corporation (FDIC) covers 100% of the funds (up to $250,000) that individuals have in a particular bank (be it in savings accounts, CDs, and/or MMAs). 

The National Credit Union Association (NCUA) offers the same insurance for funds with credit unions (up to the same amount). It's for this reason that 1) any and all savings instruments should be made through insured institutions, and 2) it's considered unwise to hold more than $250,000 in a single bank or account-type.

The FDIC has a handy breakdown for keeping track of account balances across different types.

MMAs vs. Other Financial Instruments

When trying to decide which banking institution to open a money market account with, it can become immediately apparent that there are many other types of savings instruments and investment tools which sound very similar. Ahead we provide short descriptions and links to other websites and many of our other guides that explore these tools in depth. 

Overall, consumers should take care not to confuse these various tools.

Money Market Funds: Despite the similar name, MMFs — also often called “money market mutual funds,” are very different to MMAs. While MMAs are saving tools made up of an individual’s money, MMFs are investment tools that consists of buying a portion of an investment share. 

Money Market Certificates: These are a type of account that combines some of the accessibility (liquidity) of an MMA with the savings potential of a certificate of deposit. They typically have a maturity date, but allow withdrawals through checks.

Certificates of Deposit (CDs): These types of savings instruments offer high-savings potential by time-locking the funds until a given maturity date. If funds are withdrawn before that date (which can range from 6 months to 7 years), severe penalties may apply.

Savings Account: Very similar to MMAs, savings accounts differ only in terms of accessibility and, occasionally, interest rates. The latter, however, fluctuate depending on whether the account is branch-only or online-only (as with MMAs), and the banking institution itself. Typically, withdrawing funds is slightly more restrictive than with a money market account, which works as a savings incentive.

IRAs: A very different financial investment instrument that has high savings potential, but that cannot be accessed before the account holder is 59 ½ without incurring heavy penalties. There are many different types of IRAs, including Traditional IRAs, Roth IRA, SIMPLE IRA, and SEP IRA.

IRA Money Market: An MMA within an IRA. An IRA is a portfolio comprised of several different types of investments, some riskier than others. An IRA money market provides stability and safety to the IRA.

Money Market Accounts As Part of A Healthy Savings Model

Gerri Walsh, president of FINRA, advised us on how to maximize consumers’ savings, even when it seems difficult to find any leftover money:

“One of the important questions that every financial consumer needs to ask themselves is “do I have an emergency fund set up?” 

Because if you do have emergency savings, that gives you a cushion, and the idea is to have 3-6 months of all of your expenses: your housing, your transportation, your electronics, clothing, school fees, etcetera, in an account that’s very accessible – it might be a money market account – while making sure you’ve got that cash-on-hand before you start tying up your assets in longer-term investments. 

And once you’ve got that emergency fund, then something like a money market, or a CD, or other types of investments, you might be more comfortable tying up your money for longer periods of time.”

The way to do that, she says is to:

“Pay attention to your spending, inflow and outflow, so that you have  good control over whether you actually have money in the account to cover the electronic payments and checks that haven’t yet hit the account, because otherwise you can quickly get into overdraft-land and those fees can be quite expensive too.”

During our interview, Ms. Walsh cited FINRA’s recent National Financial Capability Survey, which revealed that “even among people making less than $25,000, a quarter or more of those people were able to save up, and so that gives hope.”

How to save then? Ms. Walsh explains:

“You might have low income and feel like 'how am I ever going to be able to save?' The best piece of advice that I can give to anybody is to sit down and create a balance sheet using pen and paper or using a spreadsheet. 

“You can use pen and paper, or Excel, or Numbers, or one of the spreadsheet programs, and figure out how much you know you always pay, then tally up that amount. You know you always pay your rent or your mortgage, you always make your car payments, you always have a certain amount of groceries, gas, utilities, and things like that. What is that amount?

Take a look at the money coming in, where it comes from; look at the money going out, where does it go? 'In' is typically your job, help from a parent or some form of state or federal assistance. Where is the money coming in and how much is coming in? And then, how much money is going out?

And when you make a list of what you spend, and you can really look at your electronic transactions – look at your credit card usage, your debit card usage – you can usually do a pretty good job of looking at what you’re spending, figuring out what is going on, and where the money is going. Is it matching?

If you’re in the red – if that outflow is greater than the inflow – then you need to take a look at anywhere you can cut. Can you reduce your grocery bill? Can you reduce your entertainment bill? Can you reduce your clothing bill? Can you take the bus instead of taking a taxi or driving your own car and paying for parking? All those kinds of things factor into the outflow and how you can manage the outflow.

The reality for many people who are not saving is not that they don’t know how to manage their money, but that they have “more month” than money, as it were; the amount that’s coming in is not enough. And you also have to look carefully at that side of the balance sheet. Are there ways that you can increase the amount of income that’s coming in. Could you take on part-time additional work? Could you change jobs? Are there benefits that are available that you haven’t been taking, like federal or state benefits? Take a look at that and see if there’s a way to increase your income.

Because, ultimately, there’s a baseline of expenses and there’s a baseline of incomes; making the two match is always the challenge.”

This is the first step towards growing an emergency fund and other types of savings. It’s the first step toward financial stability.