The finest money market accounts (MMAs) have competitive minimal requirements, cheap fees, and high rates. Many, but not all, provide simple access to money as well, enabling account users to use their debit cards to make purchases or write checks directly from their accounts. The finest MMA banks and credit unions provide excellent online and mobile experiences as well as responsive and approachable customer service teams.
Forbes Advisor examined 59 money market accounts at 44 different financial institutions to come up with this ranking. These institutions included a variety of conventional brick-and-mortar banks, internet banks, and credit unions. In the areas of APY, minimum criteria, customer experience, digital experience, fees, and fund accessibility, we scored each account based on 14 different data points. Every account on our list is an online account.
The weighting given to each category is as follows:
- APY: 45%
- Lowest: 15%
- Customer satisfaction: 10%
- 10% of experience with digital
- Fees: 10%
- Money availability: 10%
The top banks and credit unions on this list include those with the greatest APYs, as well as those with low fees and minimal deposit and balance requirements that are simple to satisfy. Accounts with excellent user reviews and highly regarded online and mobile banking services were also given a better ranking. Additionally, we gave money market accounts with check-writing and debit card capabilities priority.
We also took into account if there were complicated tier systems, prerequisites, or other conditions to earn the APY. Low minimum deposits and balance limitations have a detrimental impact on scores. To be included on this list, the money market account must be accessible nationwide.
A Money Market Account: What Is It?
A money market account may be compared to a hybrid account that has both checking and savings features. You receive the ability to earn interest similar to a high-yield savings account plus, with many MMAs, the usability of a checking account, including the ability to use a debit card and write checks.
As a result of the often restricted amount of transactions you may make every statement cycle, money market accounts don’t provide as much liquidity as checking accounts. But compared to a savings account, they often provide you greater access to your money.
A High-Yield Money Market Account: What Is It?
According to statistics from the FDIC, the national average rate for money market accounts was 0.13% as of August 15, 2022. High-yield money market accounts often pay many times that amount. These accounts are mainly available through internet banks and credit unions.
A Money Market Account’s Operation
Savings accounts and money market accounts both allow you to earn interest on your deposits. These accounts are not designed to be used for regular purchases like a bank account. The ability to create checks or conduct debit transactions may be possible, but they often give restricted liquidity and access to cash.
A Money Market Account’s Opening Procedure
A money market account may be opened in person or online. To create an account with a bank or credit union, you typically need to fill out an account application, provide proof of identity, and submit other personal information.
A Money Market Account Can Lose Money
As long as money is kept at a financial institution that is FDIC or NCUA insured, money market accounts are regarded as secure investments. In the case of a bank collapse, the FDIC guarantees cash held at banks up to $250,000 per depositor, for each account ownership type. Most state-chartered credit unions and all federal credit unions are similarly covered by the NCUA.
What Benefits Come with a Money Market Account?
Money market accounts provide a compromise between checking and savings accounts by offering the liquidity (the ability to write checks and use debit cards) of a checking account and the interest returns of a savings account. These are a few of the primary benefits:
Many money market accounts have checks and debit cards, giving you a certain amount of withdrawals and transfers every statement month.
Income from interest
Money market accounts often provide interest on the money you maintain in deposit, much as savings accounts do.
The money you keep in an account with a bank or credit union that is guaranteed by the FDIC or NCUA is safe.
What Drawbacks Come with a Money Market Account?
The following are a few drawbacks of money market accounts:
Limits on transactions
Federal Regulation D restrictions in the past placed a monthly limit of six on certain withdrawals and transactions for money market accounts. The coronavirus epidemic caused these restrictions to be halted, although individual banks and credit unions may still set transaction limits and apply fees for excessive withdrawals.
Rates of interest
A money market account’s interest rate might change over time since it isn’t fixed. Consider certificates of deposit (CDs) or another product if you’re seeking for a set rate of return.
The Best Way to Pick a Money Market Account
Traditional banks, credit unions, and internet banks all offer money market accounts (MMAs), a kind of deposit account that often straddles the border between checking and savings accounts. Certain withdrawals and transfers are normally restricted to six each statement cycle, much like savings accounts. However, much as with checking accounts, you may be able to use an ATM card and write checks.
Weigh the benefits and drawbacks before choosing the finest money market account for your need. Here are some things to think about when choosing a money market account:
The rate at which a money market account generates interest or dividends, or its annual percentage yield (APY), is one of its most crucial features. Find an account that satisfies your other demands while providing a competitive APY.
Keep an eye out for charges that might reduce your returns, such as monthly fees, excessive transaction fees, and other charges.
Each institution has different minimum deposit and balance requirements. In general, simpler account maintenance results from reduced minimal requirements. Look for a checking account with minimums you can afford.
Make sure the bank or credit union has customer service staff who are available and accommodating to your needs, particularly if you are banking in a location with few branch locations.
Think about the online and mobile banking functions you use the most. After that, seek for accounts at banks and credit unions that live up to or beyond those standards.
How you may withdraw money from a money market account is different at different banks and credit unions. Some allow you to write checks and use debit cards. Each institution has its own rules, even if the Federal Reserve Board has suspended Regulation D, which limits the number of transactions a saver may make each cycle from their savings account. Before opening an account, enquire about the withdrawal choices and excess transaction cost of each institution.
In the case of a bank collapse, look for an account that is protected by the Federal Deposit Protection Corporation (FDIC), which offers up to $250,000 in insurance per depositor, per bank, for each type of account ownership. Make that the account is similarly protected by the National Credit Union Administration when dealing with credit unions (NCUA).
A Different Option from Money Market Accounts
You could discover that alternative savings options, such than money market accounts, better suit your financial requirements. Some of the options you may wish to think about are listed below.
Money Market Fund vs Money Market Account
While money market mutual funds are low-risk investment funds accessible via brokers, money market accounts are interest-bearing savings accounts offered by financial institutions. Money market mutual funds are not FDIC insured, but money market accounts are.
Savings vs money market accounts
You’ll discover that a money market account is a form of savings account that often contains certain checking account characteristics, such as check-writing rights and a debit card, when you compare it to a savings account.
Money market accounts sometimes feature higher minimum balance requirements and higher initial deposit requirements in order to get the APY.
Certificates of Deposit vs Money Market Accounts
CDs, which are time-deposit accounts, often have less liquidity than money market accounts. You consent to have your money locked up with these items for a certain amount of time. You get a set rate of interest in return on the principle sum. Rates on money market accounts are variable and subject to change at any moment. The better savings choices you can make will depend on how well you comprehend the distinctions between checking accounts and certificates of deposit.
Frequently Asked Questions (FAQs)
Are money market accounts better opened with internet banks?
It varies. Many internet banks provide greater interest rates than conventional banks since they operate with minimal overhead expenses. When investigating money market accounts, be sure to consider the minimum deposit criteria, minimum balance requirements, and any related fees in addition to the annual percentage yield (APY).
Is the FDIC insuring money market accounts?
Yes, as long as they are at a bank or other financial institution covered by the NCUA or the FDIC. In the case of a bank collapse, every bank on our list is FDIC guaranteed up to $250,000 per depositor, for each account ownership type. Most state-chartered credit unions and all federal credit unions are similarly covered by the NCUA. The NCUA provides insurance for Bethpage Federal Credit Union and Connexus Credit Union.
Can you use a money market account to make checks?
The method used differs. You can make debit card purchases or write checks from certain money market accounts. Generally, each statement cycle is restricted to six transactions, although each institution sets its own rules. Ask about withdrawal and excess transaction costs before creating an account.