Pros and cons of money market accounts

A money market account is a deposit account that earns interest while making it easier to access cash than a traditional savings account. You can find money market accounts, also known as MMAs, at banks and credit unions across the country.

These accounts combine the best features of savings accounts and checking accounts. Just like a savings account, a money market account earns interest and helps your money grow over time. Although you can often find competitive annual yields (APYs), there may be a limit to the number of withdrawals per month.

Just like with a checking account, you can write checks with an MMA, purchase and withdraw them with a debit card. While it is possible for savings accounts to offer these features, money market accounts rarely and more common.

Benefits of Money Market Accounts

Money Market Accounts offer some compelling benefits that provide attractive options for specific financial goals.

MMA gains interest

MMA is gaining interest, and is a great tool to help you grow your money while still maintaining access. As of June 1, 2025, Bankrate data shows that the average money market account fee is currently 0.46%. However, shopping can do much better.

The highest money market rate is significantly higher than average, with some at 4%. These competitive yields help you grow your savings faster than traditional savings accounts, while still allowing you to access your funds when you need them.

Easy access to cash

You don’t have to jump over the hoops to withdraw money from your money market account when you need it. This liquidity is perfect for emergency funds and short-term savings goals.

Many money market accounts come with debit cards for ATM access and check writing privileges. There may be a limit of six withdrawals per statement period, but this gives you more flexibility than a certificate of deposit or other time-locked savings product.

Money is protected by federal insurance

Federal insurance agencies don’t need to worry about the security of money market account funds until coverage. Banks or credit unions have insurance from the Federal Deposit Insurance Company (FDIC) or the National Credit Union Agency (NCUA) respectively. Up to $250,000 per depositor, account ownership is protected even if the institution fails.

You can check your bank’s insurance status using the FDIC Bank Find tool or the NCUA website.

Checkwriting and debit card possibilities

One of the biggest benefits of money market accounts is transactional flexibility. Unlike most savings accounts, many MMAs offer check writing capabilities and access to debit cards, making them versatile due to their financial needs.

Checkwriting allows you to pay invoices directly from your money market account. This is especially useful for large expenses such as rent and contractors, which are preferred payment methods for checks. Debit Card Access allows you to withdraw cash from your purchase or ATM if necessary to provide additional convenience.

Cons of money market accounts

Money market accounts have many advantages, but there are also limitations that may not suit all financial situations.

Better rates may be available elsewhere

The best money market accounts offer competitive revenue potential, but you may need to make trade-offs, but you may find higher interest rates in other savings products.

For example, you can be interested in a high-yield savings account and earn more, if not more, but you won’t be able to get a check or debit card to use the funds directly from your account.

You may also get more with a high-yield certificate of deposit, but CDs require time commitments. You agree to lock your funds for a certain period in exchange for a guaranteed APY. This eliminates the flexibility to make money market accounts attractive.

Minimum balance requirements for achieving a high rate

Most money market accounts have a fairly low minimum balance requirement for opening an account. However, you may need to spend a significant amount of money to earn an interest rate that attracts attention.

Some banks and credit unions require more than $100,000 to win the highest advertising interest rate. This will reduce access to money market accounts for those who are just beginning to build savings or for those who are just starting to work with smaller balances. Other accounts have a tiered rate, with a small balance far lower than the advertised rate.

Typically, the rate layer works as follows:

• $0-$9,999: Low Apy
• $10,000-$24,999: Midtier APY
• Over $25,000: Best advertised APY

Before opening an account, be sure to check the rate structure to ensure that you can realistically meet the required rate requirements.

Banks may charge monthly fees

If you’re not careful, monthly service fees can quickly erode interest revenues. Some money market accounts charge between $10 and $25 a month for maintenance fees.

However, many accounts offer a way to waive these fees by maintaining a certain minimum balance or setting up direct deposits. When purchasing an account, look for a money market account that doesn’t charge a monthly fee and can easily achieve a fee waiver.

Here are some common ways to avoid fees.

• Select an account with no monthly fees
• Maintain minimum balance and exempt fees
• Set up a qualified direct deposit
• Usually, we use low-price online banks

Do I need to open a Money Market account?

The combination of safety, liquidity and yield makes money market accounts a great candidate for several key parts of your financial portfolio.

• Your Emergency Fund: Money Market accounts are ideal for emergency funds as they allow you to access your safety net while earning interest. Check writing ability is especially valuable for large emergency costs such as major home repairs.
• Your Short-Term Savings Goal: Whether you’re saving for a holiday, wedding or down payment, Money Market accounts provide a safe place to accumulate funds while earning interest. With access to your debit card, you can easily use your saved funds when you’re ready to buy.
• Your tax payment: For independent contractors and freelancers, money market accounts offer a great way to separate taxes from spending money. Earn interest on funds allocated for quarterly tax payments and make them easy to access.
• Your next big purchase: If you want to save on a car, appliance, or other large-scale purchase, a money market account can eliminate the need to write a check directly when you are ready to purchase, eliminating the need to transfer funds between multiple accounts.

Online high yield savings accounts and CDs are also options for these goals, but if you need frequent access or pay flexibility, a money market account may be better.

Money Market Account and Savings Account

When deciding on a money market account and savings account, consider access, features and pricing priorities.

Transaction features: Unlike most savings accounts, money market accounts usually offer check writing privileges and debit card access. If you do not need these features, a standard high-yield savings account may offer similar or better rates with fewer restrictions.

interest rate: Both account types can offer competitive yields, but some of the best savings account fees are currently above the market rates of money. Rather than assuming that one type always pays more, compare a particular product.

Minimum Balance Requirements: Money market accounts often have high balancing requirements to get the best rates, but many high yield savings accounts offer the highest rates regardless of the balance size.

Money Market Accounts and Money Market Funds

Despite their similar names, Money Market Accounts and Money Market Funds are completely different products with a clear risk profile and features.

Money Market Account Bank deposit products insured by FDIC or NCUA can cost up to $250,000 per depositor. They act like hybrid savings check accounts with key protection and modest stable returns.

Money Market Fund This is an investment product provided by securities companies and mutual fund companies. These funds are invested in short-term, low-risk securities such as Treasury bills and commercial paper. They usually offer higher potential returns than money market accounts, but there is a significant difference.

Money market funds are not suitable for emergency funds or money you cannot afford to lose, as their value can drop during market stress. Money Market Accounts provide the safety and guaranteed access that most savers need for their short-term goals.

Conclusion

Money Market Accounts offer a combination of safety, growth potential and accessibility, providing valuable tools for specific financial goals. The ability to earn competitive interest while maintaining check writing and debit card privileges provides the flexibility that pure savings accounts cannot match.

For emergency funds, short-term savings goals, and money you need to access from time to time, a money market account can be a great option. Make sure your selected accounts meet your balance expectations and access needs.

Next steps: Ready to find the right money market account? Compare Bankrate’s best money market accounts to see current pricing and features.