How to Choose a Money Market Account

Here’s what to consider when deciding to open a money market account.

(Image credit: Getty)

If you're looking to choose a money market account, here are some factors to consider. A money market account (MMA) is an interest-bearing account at a bank or credit union, and it usually offers higher interest rates than traditional savings accounts. The way money market accounts differ from traditional savings accounts is that they sometimes allow check-writing privileges and come with a debit card that can be used to access money at an ATM. Because they offer a higher level of liquidity you won't find in other savings accounts, like CDs, they’re a good option for short-term savings goals or savings you’ll need to access regularly.

Money market accounts vs. savings accounts

How are money market accounts different from traditional savings accounts? Money market accounts can be good alternatives to traditional savings accounts, as they typically offer a higher APY on balances, although they may not offer as high of yields as some of the high-yield savings accounts on the market. 

How are money market accounts different from CDs?
Money market accounts and CDs vary in a few ways. The main one is that in an MMA, your cash is accessible. Cash in a CD, on the other hand, can't be accessed until the term is over, or you’ll risk incurring a hefty fee. Another way money market accounts and CDs differ is that CDs offer a fixed rate that can be locked in — which is ideal when rates are high. Yields on money market accounts are typically variable. 

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Choosing a money market account

Here’s what to consider when deciding to open a money market account. 

Decide what your savings goals are: What do you plan on using the funds for and when? Money market accounts are good options for those looking to save cash where it will earn interest while still being accessible, such as setting up an emergency fund.

Shop around: You’ll then want to compare banks and credit unions to find one best suited for your needs. Taking into consideration the APY on an account, as well as if it has check-writing or ATM access. Some accounts also have minimum deposit requirements and monthly fees you should also consider. 

Make sure your money is safe: When choosing a bank or credit union, you’ll want to make sure it is FDIC or NCUA insured

Open the account: You’ll then need to open the account and be prepared to put down an initial deposit, if necessary. 

Read more

Erin Bendig
Personal Finance Writer

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.