Money market accounts (MMAs) bridge the gap between no-interest accounts and higher-interest certificates of deposit. Unlike CDs, MMAs involve no time commitment. Except in specific cases, you can deposit and withdraw funds on your own schedule. However, most MMAs require minimum deposits and average balances of $1,000 or more to avoid service fees. Choosing the the best money market account requires understanding how you want to access your cash, how interest rates affect your savings habits, and how related perks can benefit your bottom line.
How MMAs Allow Access to Deposits
To distinguish money market accounts from traditional checking accounts, banks must adhere to government guidelines that limit the number of withdrawals each month. In most cases, transferring money out of your MMA or writing checks more than six times in a statement cycle will result in service fees or penalties. Therefore, you can get the most from a money market account when you use it as a place to store short term cash, like an emergency reserve fund.
Money Market Account Interest Rates Vary
Many banks and credit unions now offer money market accounts with competitive interest rates as part of bundled account offerings. For example, a money market account tied to a checking account and to a traditional savings account could reward you with a higher deposit rate than a standalone MMA. Some banks even waive fees for other services when you maintain a minimum balance in a money market account.
MMAs Offer Additional Benefits
Although money market accounts are not considered "demand accounts" by banks, you can often request check-writing privileges with no additional fees. MMA checking services allow you to earn interest on large monthly or quarterly payments, such as rent, mortgage, or tax payments. Online bill payment and account transfer services make it easy for you to move larger sums of money from your checking account to an interest-bearing money market account.
Finding the best deposit rate on money market accounts can take time, especially since so many banks offer similar MMAs. Use ShopRate.com to compare the features and benefits of money market accounts offered by some of the country's best-rated banks. Then, you can spend your spare time thinking about how to enjoy your extra interest!