Should You Open an MMA in 2024?

If you want the convenience of a checking account and the higher APY of a savings account, have I got a deal for you!

Money market accounts (MMAs) offer the chance to earn a return comparable with today's best high-yield savings accounts, and they also give you easier access to your money by way of a debit card or check-writing privileges (or both). These neat hybrid accounts aren't discussed as often as other bank accounts, but they are absolutely worth considering in 2024 for one big reason -- higher interest rates.

Here's what you need to know about higher rates on MMAs, as well as a few points to consider when you decide whether this account is right for you.

APYs are still high -- for now

Right now is a great time to have cash saved, thanks to the higher federal funds rate. It's important to note that the Federal Reserve does not set consumer interest rates -- the federal funds rate determines how much banks pay to lend each other money. But consumer interest rates are linked and tend to move in the same direction.

When we saw inflation spike in the wake of the COVID-19 pandemic, the Federal Reserve started raising rates -- and ended up raising them 11 times between 2022 and 2023 to help bring inflation under control. Consequently, rates on savings accounts, certificates of deposit, and money market accounts spiked -- while rates on loans and credit cards did too.

The move seems to have worked, and as 2024 proceeds, the Fed is expected to lower rates. This would likely lead to falling annual percentage yields (APYs) on bank accounts (bad for savers), and perhaps also lower APRs on loans (good for borrowers). As of this writing, the highest APY on our list of the best money market accounts is 5.30%, which is quite good. If you're on the hunt for an account with more flexibility than either CDs or savings accounts, consider an MMA -- and pay special attention to those offered by online banks specifically, as they'll be less likely to come with pesky bank fees.

A few caveats for MMAs

It would be remiss of me not to mention a few potential deal breakers for money market accounts (and I strive to give you, the reader, all the information you need). You may need to have more savings to initially open an account than you might with a savings account -- many savings accounts can be opened with $0. Similarly, you might need to maintain a higher balance to keep earning a high APY on the account.

Speaking of maintaining a high APY, once the Federal Reserve lowers rates, you'll see the rate decline on your MMA. If you'd prefer to lock in a higher APY for a longer period, I recommend exploring CDs instead -- it's a great time to find a 1-year or 18-month CD with a high rate. Just be sure you won't need your money during that time.

Like savings accounts, many MMAs still have monthly withdrawal limits that date back to old Regulation D rules (some banks stopped enforcing that six withdrawals per statement cycle during COVID-19). So if you're hoping to dip into your cash often, this is something to be aware of. If you go over your transaction limit, you may face a fee or have your account converted to a checking account -- losing that sweet APY in the process.

And finally, money market accounts are less common than savings accounts, so if you already have a banking relationship that you'd like to extend by adding an MMA, you may not be able to do that, depending on your bank. Luckily, The Ascent's list of the best money market accounts can help you find a winner.

You may never have considered an MMA before, but one could be a good fit for your money this year. And now you're better armed to decide.