Many people think of a money market account  (MMA) as a type of investment. It’s important not to confuse a money market deposit account with a money market fund  (MMF). While a money market deposit account is protected by either the FDIC or NCUA​, a money market fund has no such protection. MMA’s and MMF’s are wildly different animals. If you want your money to grow safely, choose a money market account. If you want your money to grow aggressively, you're a likely more suited to money market funds.

Overview of Money Market Accounts

While money market accounts can earn respectable interest rates, it’s better to think of them as a savings account with perks. Like a savings account, a money market account is a good place to park your money for a long period of time. But unlike a savings account, a money market account actually allows you to write checks. Some MMA’s even include a debit card.  

You may be wondering why you shouldn’t simply use a high interest MMA instead of a checking account. That could work for some people. But very few.

Most people shouldn’t rely on an MMA for their checking goals. That’s because there are limits on how many withdrawals you can make each month. Federal Regulation D limits you to six withdrawals per month, per account.

The other main reason for limiting withdrawals on MMAs is to allow the financial institution you choose to invest your money efficiently. Institutions enjoy investing your money in vehicles like treasury notes, certificates of deposit (CD), municipal bonds, etc. If you keep pulling your money out, it’s hard for the institution to reliably invest the money and maximize returns. If they can’t reliably invest the money, the institution can’t justify giving you the high interest rate. So think of the capped withdrawals as a welcome restriction rather than one of inconvenience.

Other Aspects of MMAs to Keep in Mind

If you make more than six withdrawals per month, the financial institution will likely downgrade your money market account to a checking account. And/or you will incur a penalty fee. Make sure you’re comfortable being limited in your withdrawals. Again, it’s wise to have a separate account for daily spending.  If you want to be more aggressive with your money, consider opting for certificate of deposits instead.

If you’d like to avoid the inconvenience of CDs while still getting a comparable rate of return, opt for a savings account.  

If you want a savings account with a higher interest rate and check writing capabilities, a money market account is for you. Let’s find the best rates available for 2016.


How the Calculator Works

National or Local: Do you want to only sort through local financial institutions or is your focus on finding the best rates possible? Selecting "national" will display the best rates available to you.

Institution: You can sort A-Z or Z-A. Banks and credit unions are listed since there is little difference between the two when opening an account.

APY: This is the annual percentage yield. It’s automatically sorted high-to-low for your convenience.

Rate (APR): In this column, you’ll notice a spot for an introductory period and rate. Check to see if one is offered. But usually, there will just be a no intro rate listed.

Minimums: Pay attention to this column. It shows the minimum deposit needed to open an account. It also shows the minimum balance you must keep in order to avoid fees. Monthly fees will be listed in the third row. Finally, you’ll see whether or not the account offers check writing privileges. If it doesn’t, you may want to turn your focus to savings accounts.

Other Areas in the Calculator Worth Noting: Underneath each institution's name/logo, you’ll find additional information that’s worth looking over. Then, once you decide which MMA is right for you, click the "Next" button. This will direct you to the bank’s money market deposit account page. You’re nearly finished with the process.

How to Quickly Choose the Best Rate

The calculator lists money market interest rates from highest to lowest. Choose the first account and click "Next." As long as the bank has a good reputation and good customer service, you should be good to go. After all, you’re choosing a deposit account. You likely won’t be interacting with the institution too much. You never have to go to a physical location, so going after the highest interest rate is usually your best bet.

Keep in mind, the other information listed in the calculator is helpful. Make sure the fees are low or nonexistent and be sure to check the minimum balance requirements. You may even find an account that is kind enough to offer a signup bonus.  If you're looking for more great personal finance tips and tricks, you can subscribe to our Personal Finance newsletter!

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