What is a money market account?
A money market account, or MMA, is a savings account that allows a limited number of checks to be drawn from the account each month. The rates — called Annual Percentage Yield (APY) — on money market savings accounts are typically higher than traditional savings accounts but may require larger minimum deposits and balances.
If you need more than occasional account access and are looking for higher yields, a money market account can be a better option than a traditional savings account. The best money market accounts offer compelling high-yield rates.
Best money market accounts & rates for June 2018
|Northern Bank Direct||2.26%||$5,000|
|All America Bank||1.75%||$500|
|My Banking Direct||1.75%||$25,000|
Compare the best money market accounts and pick the one that offers the right minimum deposit and interest rate for your financial situation.
What money market accounts do
At their core, money market accounts are basically just a type of savings account, with some minor variations. How much interest a money market account pays, and whether it’s the highest-paying deposit product offered, varies from bank to bank. The interest rates tied to money market accounts are typically referred to as the annual percentage yield (or APY). This reflects how much money you can expect to earn with compound interest each year.
The best MMA rate available to all savers is 2.26% APY. That’s 12 times higher than the national average, according to Bankrate’s latest national survey of banks and thrifts. But there are more than a dozen banks that offer money market rates as high as 1.5% APY.
How do money market accounts stack up?
Comparing account features
|Savings||Checking||Money market account|
|You get a checkbook for withdrawal||X||X|
|You get a debit card for withdrawal||X||X|
Some of the best money market accounts require a significant minimum deposit. If $5,000 is too much for you to tuck away, look to a bank that has a lower requirement.
Use Bankrate’s simple savings calculator to see how much you stand to make with each of these accounts.
How does interest work with a money market account?
Interest rate on a money market account is compounded — either daily or monthly and the interest is paid out usually monthly or quarterly.
Your interest rate can always change. Some banks have been gradually increasing interest rates in response to the Federal Reserve. Though this could mean you’ll pay more interest on credit cards and auto loans, it could also mean higher interest rates on savings accounts. Keep an eye out for the ripple effects of the Fed’s decisions.
In the meantime, if you’re looking for a guaranteed return on your investment, compare the best savings rates with the top CD rates. A CD is an account with a fixed interest rate. CDs typically pay more interest than a standard savings account in exchange for tying up funds for a set amount of time.
Recap: Best money market accounts
Here are the top money market account rates available nationwide: