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Money market accounts are a little-known hybrid between checking and savings accounts. They're designed to give you a high interest rate without sacrificing easy access to your money.
The best money market accounts offer APYs that are competitive with the best high-yield savings accounts and offer multiple ways for you to access your funds when you need them. Here's a closer look at some of the top money market accounts available and how to choose the one that's right for you.
The Ascent's best money market accounts:
- 0.50% APY: CIT Bank Money Market
- 0.25% APY: Nationwide by Axos Money Market Plus
- 0.30% (balances under $100k), 0.35% (balances $100k+) APY: Discover Money Market
- 0.50% APY: Ally Money Market Account
- 0.55% APY: Sallie Mae Money Market
- Up to 0.55% APY: TIAA Bank Yield Pledge Money Market Account
- 0.50% APY: Synchrony Money Market
Rates as
of June 18, 2021
CIT Bank Money Market
-- 0.50%
The CIT Bank Money Market Account offers among an industry-leading rate with a low minimum opening balance requirement of $100. It doesn't offer check-writing capabilities or a debit card like some of its competitors, but it integrates with Zelle and PayPal and allows for electronic transfers with bill pay coming soon. If you're looking for a money market account that's low on fees and offers a higher rate than most high-yield savings accounts, the CIT Bank Money Market Account could be a good fit for you.
Nationwide by Axos Money Market Plus
-- 0.25%
The high APY makes it a compelling money market account to consider. The low fees and ATM fee reimbursements monthly are the cherries on top.
Discover Money Market
-- 0.30% (balances under $100k), 0.35% (balances $100k+)
Discover's money market account stands out for the same reason as many of its other banking products. It offers low fees, a competitive tiered APY system that pays you more for higher balances, and easy access to your money, including a debit card, mobile banking tools, and check-writing capabilities. Discover Money Market customers also get access to over 60,000 fee-free ATMs nationwide.
Ally Money Market Account
-- 0.50%
Ally's banking approach carries over to its money market account with a high APY and focus on cutting routine account fees to $0, including monthly maintenance. What's more, there are no minimum balance requirements.
Sallie Mae Money Market
-- 0.55%
The Sallie Mae Money Market Account offers a pretty high APY, especially considering that it has no monthly fees or minimum balance requirements. It doesn't offer debit cards or ATM access at the moment, but you can manage your funds via electronic transfer or withdraw them directly from the account by writing a check.
TIAA Bank Yield Pledge Money Market Account
-- Up to 0.55%
The TIAA Bank Yield Pledge Money Market Account offers a high promotional APY for its first year, followed by a competitive tiered APY system that rises as your balance increases. Like all TIAA Bank's Yield Pledge products, its money market account is guaranteed to offer rates in the top 5% of all competitive accounts, so you always know you're getting a good deal. This account is best for those with a few thousand dollars to place in their account as these customers are eligible for ATM fee reimbursements.
Synchrony Money Market
-- 0.50%
Simplicity is the name of the game with Synchrony Money Market. There's no minimum balance to earn the high APY, accountholders have checking and ATM capabilities, and the lack of nuisance fees means more money in your pocket.
What is a money market account?
Money market accounts (MMAs) are deposit accounts offered by most banks that share some features of checking accounts and savings accounts. Money market rates are comparable to those found with savings accounts, with the best ones offering around 1% APY.
Unlike most savings accounts, money market accounts often come with checks and debit cards for direct fund withdrawal. Money market accounts are also FDIC-insured, so your money is protected up to $250,000 per person per bank in case of bank failure.
When should I consider a money market account?
Money market accounts are a good idea when you have savings you'd like to earn a high APY on but you don't want to restrict your access to your funds. A high yield money market account circumvents the biggest drawback of a savings account, which is that you cannot usually withdraw funds directly -- you must first transfer funds to a checking account. But money market accounts do enable you to take out cash directly via debit card or checks, and some accounts offer both.
They're not a great replacement for a checking account, unless you rarely withdraw funds. But a money market account could replace your savings account if you wanted it to. Both money market accounts and savings accounts are subject to Regulation D, which limits you to six withdrawals per month and charges you extra for exceeding these limits. The government has waived this rule during the pandemic, but individual banks still restrict the number of monthly transactions you can make.
What should I look for in a money market account?
Here's what you should look for:
- FDIC insurance: This protects your money in case your bank goes under. Most money market accounts should have this.
- High APY: Look for an APY that's close to the highest money market rates, but don't worry about choosing the highest-yield money market account there is. Banks change their rates and the best options can shift over time.
- Debit card: Some accounts include a debit card in case you'd like to withdraw cash directly or use your money market account funds to buy things.
- Check-writing capabilities: Some money market accounts come with check-writing capabilities instead of or in addition to a debit card. Look for an account that has this if you think you'll need to write checks directly from the account.
- Branch locations: If you prefer to bank in person, you should open your money market account at a bank that has branches near you. Withdrawing funds from your money market account in person does not count toward your limit of six monthly withdrawals, so it's a way to take out more money without incurring extra fees.
- ATM locations: If your money market account has a debit card, you should check where your nearest fee-free ATMs are and whether your bank charges any fees for using an out-of-network ATM. The best banks may reimburse you for some out-of-network ATM fees each month.
- Balance requirements: Check to see if your bank has a minimum initial deposit requirement or ongoing balance requirements, and if so, make sure you are able to meet them.
How to choose a money market account
Look for an FDIC-insured money market account that has a competitive APY and enables you to access funds in the way that's most convenient for you. Your bank may offer a debit card, check-writing capabilities, or both, and brick-and-mortar banks give you the additional option to withdraw funds in person.
Money market terms to know
Here are some common terms used when discussing money market accounts and rates.
- Annual percentage yield (APY): The APY is an annualized representation of the account's interest rate. It gives you some insight into how much interest you'll earn on your funds, with a higher APY being better. APYs on money market accounts are subject to change at any time.
- Minimum balance: Some money market accounts require a minimum deposit in order to open the account or to avoid monthly maintenance fees. These minimum balance requirements can be higher than the requirements for savings accounts.
- Transaction limits: Money market accounts are subject to restrictions on the number of convenient withdrawals you can make without incurring additional fees. Convenient withdrawals include electronic transfers, most check withdrawals, and online bill pay, but do not include things like withdrawals made at a branch location or cash taken out at an ATM.
What are alternatives to money market accounts?
If you don't think a money market account is a good fit for you, here are some other options worth considering.
Savings account: A savings account is another type of deposit account that offers similar APYs to money market accounts but has more restrictions on accessing funds. You're limited to six savings account withdrawals per month if you'd like to avoid fees, and most savings accounts lack check-writing capabilities or debit cards. But savings accounts also have lower minimum balance requirements than money market accounts and some may not have minimum balance requirements at all.
CD: A CD is another type of deposit account (CD stands for "Certificate of Deposit"). These can have APYs comparable to or even higher than money market account rates. In exchange for these higher rates, you have to pay a penalty if you withdraw your funds before the full length of the CD term. CD terms can range from a month to 10 years, with most falling in the six-month to five-year range. They can be a great place for savings you don't intend to use anytime soon, but you have to consider what interest rates are doing. CD rates are typically locked in for the full term length, which is great when rates are dropping but bad when they are climbing.
Recap: Best money market rates and accounts
| Offer | APY | Fees |
|---|---|---|
| CIT Bank Money Market | 0.50% |
Monthly Fee: $0 Min. Balance: $100 |
| Nationwide by Axos Money Market Plus | 0.25% |
Monthly Fee: Waived with $1,000 daily min. balance Min. Balance: $1,000 |
| Discover Money Market | 0.30% (balances under $100k), 0.35% (balances $100k+) |
Monthly Fee: $0 Min. Balance: $0 |
|
Ally Money Market Account |
0.50% |
Monthly Fee: $0 Min. Balance: $0 |
|
Sallie Mae Money Market |
0.55% |
Monthly Fee: $0 Min. Balance: $0 |
|
TIAA Bank Yield Pledge Money Market Account |
Up to 0.55% |
Monthly Fee: $0 Min. Balance: $0 |
|
Synchrony Money Market |
0.50% |
Monthly Fee: $0 Min. Balance: $0 |
FAQs
-
Money market accounts are a type of deposit account that offers the high APY of a savings account with the easy accessibility of a checking account.
-
The best money market accounts have high APYs and give you multiple ways to access your funds when you need them. They're also FDIC-insured and have affordable minimum balance requirements.
-
A good interest rate for a money market account is around 1% APY, though this can fluctuate over time.
About the Author
Kailey has been writing about banks, credit cards, loans, and all things personal finance since 2012. She also writes for The Ascent's parent company, The Motley Fool. Her work has appeared on USA Today, CNN Money, Fox Business, and MSN Money. She's a graduate of the University of Wisconsin and happily lives in the woods of northern Wisconsin where she grew up.
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