A money market account (MMA) is a type of savings account that combines the best features of both checking accounts and regular savings accounts. With money market accounts, you can access your savings through checks and debit cards while typically also earning a higher interest rate than you would with most standard savings accounts. Currently, the average annual percentage yield (APY) for an MMA is below 1.00%, but you can find accounts with much higher rates.

Latest money market account rates

If you have at least $10,000 to stash in a money market account, you could get an average APY of 0.60%, according to Curinos data. This is lower than last week. The highest rate available is 5.13%, the same as last week.

If you invested $10,000 into an MMA for a year, with a 5.13% APY that compounds daily, you’d earn $525.24 in interest.

If you invested $10,000 into an MMA for a year, with a 0.60% APY that compounds daily, you’d earn $67.21 in interest.

The basics of money market accounts

If you want easier access to your savings account funds — or a checking account that pays higher interest — then you are a prime candidate for a money market account. Money market accounts combine the best features of savings and checking accounts.

Like checking accounts, money market accounts let you use checks or debit cards to access funds. Like savings accounts, money market accounts pay interest on your deposits, though usually at higher rates. The average money market account paid interest of 0.61% as of July 2, 2024, , according to Curinos. In contrast, the average savings account paid . The best money market rates pay annual percentage yields of 5.00% or more.

How money market rates work

Like all savings accounts, money market accounts pay interest on your balance. The amount of that interest is largely up to the bank or credit union — and there can be wide gaps between the rates offered by different financial institutions. The interest you earn might be compounded daily, monthly, quarterly or yearly. Rates are reflected in an account’s annual percentage yield, which determines the amount of your return.

What factors influence money market account rates?

One of the factors that influences money market account rates is the broader interest-rate environment. When market rates are high, savings account rates tend to go up as well, including money market accounts. When market rates head lower, so do money market rates.

But banks have the biggest impact because they set rates based on their own business model. If a bank gets a lot of its business from deposit accounts, it needs to offer competitive money market rates to draw more customers. On the other hand, banks that don’t rely as heavily on deposit accounts can get by offering lower rates.

Benefits of money market accounts

The biggest advantage of a money market account is that you can spend or withdraw money using checks or debit cards — something you typically can’t do with other types of savings accounts. Another benefit is that your money is protected by the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA) as long as your financial institution is federally insured, which you don’t have with stocks and other investments.

Here are a couple of other advantages:

• You’re likely to get higher APYs with a money market account than with a standard savings or interest-bearing checking account
• Unlike a CD, your money isn’t locked into a set term with a money market account so there are no early withdrawal penalties.

Drawbacks of money market accounts

There aren’t a lot of drawbacks to money market accounts when compared with other bank savings products. Like all accounts, you could face limits on monthly transfers and withdrawals as well as minimum deposit and balance requirements. Some money market accounts charge monthly maintenance fees, ATM fees, transfer fees or inactive account fees.

The main drawback with a money market account is that the return you get could be pretty low unless you shop around for the highest APY. Putting your funds into a money market account that pays a 0.05% APY means your money could lose value if you factor inflation into the mix.

Steps to open a money market account

Before opening a money market account, make sure you find the right one by comparing interest rates, fees and minimum balance requirements. You should also find out how accessible the accounts are through checks, transfers and debit cards.

The process of opening an account varies from one bank to the next, but most allow you to do so online or through a branch. You’ll likely be asked to provide personal information such as your full name, address, birthdate, Social Security number and government ID such as a driver’s license or passport. In some cases, you might also be required to make an opening deposit.

Money market accounts vs. other investment options

Because money market accounts are bank savings accounts, the most comparable options are standard savings accounts and certificates of deposit (CDs).

Money market accounts offer a safe, predictable return because you earn interest at financial institutions backed by the FDIC or NCUA. Money market accounts also offer liquidity and accessibility you might not find in other investments. Stocks and mutual funds could provide higher returns over the long term — but they carry more risk. Real estate investments carry more risk as well and often require large monetary investments.

The Federal Reserve and money market account rates

The Federal Reserve plays a big role in all types of savings account rates, including money market accounts. Banks and credit unions tend to follow Fed policy. When that policy leads to higher interest rates, you can expect money market rates to move up. When the Fed lowers rates, your money market APY is likely to go down.

Alternatives to money market accounts

In terms of bank accounts, the main alternatives to money market accounts are checking accounts, standard savings accounts and CDs. Checking accounts hold very little advantage over money market accounts unless they pay interest — and you’ll almost always get a higher APY with a money market account.

Similarly, money market accounts usually offer higher APYs than standard savings accounts. The exceptions are high-yield savings accounts, but they don’t let you access the money via checks or debit cards like money market accounts.

Some CDs offer higher rates than the typical money market account, but your money is also locked in until the end of the term. If you withdraw money before the CD’s maturity date, you’ll face an early withdrawal penalty.

Frequently asked questions (FAQs)

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This content is for educational purposes only and is not intended and should not be understood to constitute financial, investment, insurance or legal advice. All individuals are encouraged to seek advice from a qualified financial professional before making any financial, insurance or investment decisions.

Note: While the offers mentioned above are accurate at the time of publication, they're subject to change at any time and may have changed or may no longer be available.