Source: Flickr user 401(k) 2013.

With the stock market fairly expensive by historical standards, it may make sense to keep some of your money in "cash." This doesn't mean stuffing $100 bills under your mattress, but rather having a portion of your investment portfolio in safe, readily accessible places such as a money market account.

The problem is that money market interest rates can be downright depressing. According to Bankrate, the national average for money market interest rates is a paltry 0.1%, and many of the big banks pay even less than that.

While you're not going to get rich with a money market account, you can achieve better returns than that. With a little homework, you should be able to keep some cash handy while earning a return many times greater than the national average. So why should you use a money market account for your cash, and how do you find the best money market rates?

Why a money market account for your cash?

Money market accounts are a way to save money while receiving some of the benefits of both savings accounts and checking accounts.

Interest rates are generally better with money market accounts than with savings accounts. Banks can offer those rates by typically requiring a higher minimum balance than they do for a savings account and by limiting the number of withdrawals allowed. Federal law limits money market account holders to six withdrawals per month, including checks and transfers but not including ATM withdrawals.

Like a checking account, money market accounts usually allow check-writing ability and a debit card. The limit on withdrawal transactions can make money market accounts slightly less liquid than checking accounts, but still gives you on-demand access to your cash savings.

Just like checking and savings accounts, money market accounts are insured by the FDIC, making them one of the best choices for a truly safe place to keep your savings.

For the best money market rates, look to the Web

While virtually any money market account will come with a better interest rate than you'll find on a savings account from the same bank, rates can vary tremendously from bank to bank. And the best rates are usually offered by Internet-based banks.

A quick search on shows rates of nearly 1% from some institutions. I know 1% is not the type of long-term return you want from your investments, but for cash that's just sitting there, it's far better than nothing -- or next to nothing, which most banks pay. On a $25,000 money market account, this could mean $250 in extra money each year.

For example, Ally Bank offers a money market account paying a 0.85% APR as of this writing. In addition, there is no minimum balance requirement (rare for money market accounts), and the fees are remarkably low. Ally charges just $9 for an overdraft and just $10 if you make too many withdrawals.

There are many other exceptional rates and terms out there; check out what's currently available over at Bankrate. If you have a large amount of cash to deposit -- say, $25,000 or more -- you may qualify for an even higher interest rate from some banks.

Other things to consider

A high interest rate is nice, but it doesn't tell the entire story. Other factors to consider are minimum balance requirements, the potential for fees, convenience, and customer service.

Make sure the minimum balance requirement for the account you choose gives you sufficient "wiggle room" so that if you need to access some of your money you won't fall below the minimum, which can trigger fees. Look into how much it will cost you if you fall below the minimum balance or make too many withdrawals in a month.

Also keep in mind that numbers aren't everything. If you think you'll need ready access to your money on a regular basis, make sure the institution you choose offers a convenient way to withdraw cash. National banks have thousands of branches and ATMs, while local credit unions and Internet-based banks could have very limited options.

Customer service is also something to consider. Generally, you'll get more personal service from local banks, while the national banks vary greatly in their customer satisfaction. offers reviews of the banks, and it's worth checking out the strengths and weaknesses of your prospective institution before opening an account.

The takeaway

A money market account can be a great way to keep your reserve funds safe and keep some investment cash on the sidelines while still earning a decent return and maintaining access to your money. And while it's nice to see your savings grow, be sure to read the fine print rather than simply chasing the best money market rates.

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