What Is a Money Market Account?

A 澳洲幸运5官方开奖结果体彩网:money market account is a type of bank account that pays a better interest rate than what you can earn on the money in your checking account (ꦛwhich typically pays no interest) or in a regular savings account. That makes it a great place to move some of the funds you don't need every day, boosting the amo𓆉unt of interest you earn over the course of each month.

Money market accounts are smart for anyone who wants to earn a high-yield interest rate but also wants check-writing privileges. Though you may not be able to find a money market APY quite as high as the 澳洲幸运5官方开奖结果体彩网:best savings account, you can oft🧜en get close, while adding an addi♈tional way to withdraw your funds.

Interest rates on money markets are variable and can change over time. They are not fixed like with a CD. They are more like a savings or checking account where the rate is variable and the account is liquid. That means you ca🎶n deposit and withdraw funds more or less as you choose. But unlike a savings account, money market accounts give you the option to write checks, making them a sort of hybrid between savings and checking accounts.

Pros and Cons of Money Market Accounts

Pros Explained

• Your balance earns interest: Unlike a typical checking account, your balance in a money market will earn an annual percentage yield (APY), usually paid to you at the end of each monthly statement cycle.
• Allows withdrawals and deposits when you like: You can deposit money into a money market account at any time, and you can generally withdraw it when you like. Some accounts limit your withdrawals to six per month, but many accounts no longer have this restriction.
• Offers virtually risk-free safety: You cannot lose money on a money market account, and if you open it at an FDIC-insured bank or NCUA-insured credit union, your deposits are federally insured in the unlikely scenario that the institution fails.
• If rates rise, your APY could increase: Like a savings account, money market accounts pay a variable rate, which means the APY may rise when interest rates are on an upswing.

Cons Explained

• Scoring a high yield may require opening an account at another bank: To earn the best rate on a money market account, you'll need to shop around. Odds are high that scoring a top rate will require opening a money market account at a bank different than where you already have a checking and savings account.
• Easy access to your money can make it tempting to spend it: Because you can withdraw funds from a money market, there is little to stop the temptation of pulling out money and spending it.
• If rates drop, your APY could be lowered: When interest rates drop, the rate on your money market account is likely to be reduced.

How Much Can You Earn in a Money Market Account?

A money market account pays interest, just like a savings account. Money market accounts tend to pay higher rates than traditional savings accounts; their rates are on par with high-yield savings account rates. Here's an example of how much you could make in a money market account compared to a traditional savings account if you were to deposit $1,000 and then contribute $250 per month for one year:

You cou🌼ld earn $111.53 more in interest in a money market account compared to a traditional savings account.

Key Terms to Know About Money Market Accounts

Money markets are very similar to savings accounts. There are a few key terms you'll see and hear when looking into opening a money market account:

• Opening minimum deposit: This is the amount you will need to put into the account immediately upon opening in order to qualify for the APY and interest rate.
• APY: This is the annual percentage yield, or the rate you can earn if you keep the account open and in good standing for one full year. APY includes compounding.
• Interest rate: This rate may be a little lower than the APY because it does not include compounding.
• Ongoing balance: This is the required amount you need to maintain in the money market account every month in order to earn the APY.
• Check-writing: This is the ability to write a physical check, drawing funds from your money market account. This is the main difference between a savings account and a money market account.
• Maximum withdrawals: This is the limit on how many times you can withdraw money from your money market account per month. The limit will differ by bank or credit union.

How to ☂C🥀hoose the Best Money Market Account for You

The best money market account for you will be one that pays a competitive interest rate and has account requirements that will work for you. Some of the account features you'll want to consider are:

• An opening deposit minimum
• An ongoing balance requirement
• Any monthly maintenance fees
• The number of withdrawals you'll be allowed to make per month
• Whether an ATM card is provided and can be used for cash withdrawals

To determine which of the factors above are the most important to you, think about how you expect to use the account, such as the minimum balance you feel confident you can maintain and how often you'll want to take funds out of the account.

How to Open a Money Market Account

Once you've decided which money market account is best for you, opening the account should be pretty straightforward and will follow the same process as opening a savings or checking account.

1. Start the online account opening process: Most institutions allow online account opening, so look for an "Open Account" button or a link on the institution's website.
2. Provide personal information: Fill in all of the information asked of you on the online application. Note that you'll be asked security questions to confirm your identity.
3. Upload required documents: The process varies from institution to institution, but most will ask you to provide a copy of identification, such as a photo or scan of your driver's license. Some banks will ask for this within the online account opening process, while others may ask you to upload it or send it via secure message after you've submitted your application.
4. Fund the account: Adding money your account may need to take place at the same time as you open the account, or may be able to be done later. If the money market account has a required opening deposit, you'll be asked toward the end of the application process how you'll fund your account. The most common way is via an ACH transfer from another bank, but other methods include a wire from another bank, sending in a paper check, or sometimes even charging a credit or debit card.
5. Register for online banking: Once you've completed the account application, some banks will make online banking immediately available to you. But others may require some time to fully approve your application, providing the info you need for online banking within a few days of your completion of the application.

Alternatives to Money Market Accounts

Here are a few additional options to consider instead of, or in addit🔯io𝔉n to, putting funds in a money market account.

• Traditional savings account: Money market accounts tend to pay a higher return than traditional savings accounts. A money market account may require a larger initial deposit or ongoing balance—or both—than a standard savings account, but not always, so shop around. Money market accounts will also allow you to write checks, which traditional savings accounts do not offer.
• High-yield savings account: High-yield savings accounts and money market accounts are fairly interchangeable, with the only specific difference being that money market accounts offer check-writing. If you don't care so much about writing paper checks, then it's smart to shop the best high-yield savings accounts, as they often pay higher APYs.
• Certificate of deposit (CD): If you know you can live without a portion of your savings for months or years, you can often earn more by opening a certificate of deposit (🃏CD). That's because banks and credit unions typically offer a higher APY on CDs in exchange for your agreement that you'll keep the funds in the CD until it matures. Another advantage of CDs is that their rate is fixed. If interest rates drop in the future, your money market rate will drop as well, but a CD rate is locked for the full CD term. Note that early withdrawals from a CD will trigger a penalty, but for some, this is a useful tool for thwarting the temptation to spend your savings.
• U.S. savings bonds: EE bonds offer a fixed interest rate that you'll know at the time of making your deposit decision, while I bonds offer a rate that changes every six months based on current inflation levels (hence, the name I bonds). These investments are exceptionally safe, but note that they do not, for any reason, allow a withdrawal within the first 12 months.
• U.S. Treasuries: T-bills allow you to lend money to the U.S. government for a short, fixed amount of time. Considered one of the safest investments in the world, T-bills offer durations ranging from four weeks to one year.

Why You Should Trust Us

Investopedia has been researching bank deposit rates from over 200 nationwide banks and credit unions every weekday since 2019. We have been publishing our ranking of the best money market accounts since 2021. When ranking money market accounts, we ensure the institutions meet our requirement of being federally insured by the FDIC or NCUA, and we research the basic account features, such as minimum required balances, any fees, and other factors that will help readers choose the account that will best meet their needs. Launched in 1999, Investopedia has been helping readers find the best savings account and CD rates since 2019, and the best money market accounts since 2021.

How We Find the Best Money Market Account Rates

Every business day, Investopedia researchers and fact-checkers track the rate data of more than 60 banks and credit unions that offer money market accounts to customers nationwide, resulting in a daily ranking of the top-paying money market accounts. To qualify for our list, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account's minimum initial deposit must not exceed $25,000. The account also must allow check-writing.

Banks and credit unions must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. If the account is accessible only through a mobile app, we require that the app be available on both the iOS and Android platforms.

Investopedia was founded in 1999, and our coverage of the best money market accounts began in 2019. For more about how we choose the best money market accounts, 澳洲幸运5官方开奖结果体彩网:read our full methodology.

Learn More About Money Market Accounts

• 澳洲幸运5官方开奖结果体彩网:What Is a Money Market Account?
• 澳洲幸运5官方开奖结果体彩网:Guide to Money Market Accounts
• 澳洲幸运5官方开奖结果体ꦰ彩网:🍬What Is a Retirement Money Market Account?
• 澳洲幸运5官方开奖结果体彩网:How Do Money Market Accounts Work?
• 澳洲幸运5官方开奖结果体彩网:How to Open a Money Market Account
• 澳洲幸运5官方开奖结果体彩网💎:Pros and Cons of 🍸Money Market Accounts
• 澳洲幸运5官方开奖结果体彩网:Are Money Market Accounts Safe?
• 澳洲幸运5官方开奖结果体彩网:How A🌞re Money Market Account Rates Determined?
• 澳洲幸运5官方开奖结果体彩网:Money Market Accou🦩nt vs. Money Market Fund
• 澳洲幸运5官方开奖结果体彩ꦚ网:Money Market Acc🍷ount vs. Savings Account
• Money Market Ac🐟count vs. High-Yield Checking Acco🏅unt