Money Market Account Overview
Types of Bank Accounts
Bank accounts offer convenience, safety and security for your money. Whether you bank online or prefer a traditional bank or credit union, there are numerous account options from which to choose.
Different types of bank accounts can serve different purposes, depending on your needs. Some allow you to spend or pay bills, while others are designed for short- or long-term savings. The most common types of bank accounts include:
- Checking accounts
- Savings accounts
- Money market accounts (MMAs)
- Certificate of deposit accounts (CDs)
Understanding how the different types of bank accounts compare can make it easier to decide where to keep your money.
Money Market Account Basics
Money market accounts (MMAs) combine features of savings accounts and checking accounts into a single deposit account. A money market account typically allows you to earn interest on balances, and it can also offer check-writing and debit card access for spending or bill payments.
Like savings accounts, money market accounts are subject to Regulation D, which means under normal circumstances, you’d be limited to six withdrawals per month. And again, banks can charge an excess withdrawal fee for going over six withdrawals even while the rule is indefinitely suspended.
Money market accounts may have higher initial deposit limits to open and higher minimum balance requirements to maintain. A money market account, for example, may require $1,000 or more to open, while a savings account may require no minimum deposit.
You might open a money market account if you want to earn interest on money you don’t plan to spend yet, while making it convenient to eventually do so with a debit card or check. For example, you might set up a money market account to hold your down payment savings if you’re prepping to buy a home.
How to Choose a Money Market Account
Choosing a money market account is similar to choosing a checking account, in terms of fees or features. If you want a debit card or check-writing privileges, be sure to check whether a particular money market account offers those features, as not all of them do. And be sure you’ve considered the pros and cons of money market accounts.
Also, keep the minimum deposit and minimum balance requirements in mind. While you don’t necessarily need several thousand dollars to open a money market account, you may need it to earn the best APY with some accounts. That’s because banks may tier money market account interest rates, paying you a higher APY for a higher balance.