| Account Type | APY | Deposit | Monthly Contributions | Earnings After 1 Year | Interest Earned |
|---|---|---|---|---|---|
| Traditional Savings | 0.01% | $1,000 | $250 | $4,000.24 | 24 cents |
| Money Market Account | 4.50% | $1,000 | $250 | $4,111.77 | $111.77 |
You could earn $111.53 more in interest in a money market account compared to a traditional savings account.
Key Terms to Know About Money Market Accounts
Money markets are very similar to savings accounts. There are a few key terms you’ll see and hear when looking into opening a money market account:
- Opening minimum deposit: This is the amount you will need to put into the account immediately upon opening in order to qualify for the APY and interest rate.
- APY: This is the annual percentage yield, or the rate you can earn if you keep the account open and in good standing for one full year. APY includes compounding.
- Interest rate: This rate may be a little lower than the APY because it does not include compounding.
- Ongoing balance: This is the required amount you need to maintain in the money market account every month in order to earn the APY.
- Check-writing: This is the ability to write a physical check, drawing funds from your money market account. This is the main difference between a savings account and a money market account.
- Maximum withdrawals: This is the limit on how many times you can withdraw money from your money market account per month. The limit will differ by bank or credit union.
How to Choose the Best Money Market Account for You
The best money market account for you will be one that pays a competitive interest rate and has account requirements that will work for you. Some of the account features you’ll want to consider are:
- An opening deposit minimum
- An ongoing balance requirement
- Any monthly maintenance fees
- The number of withdrawals you’ll be allowed to make per month
- Whether an ATM card is provided and can be used for cash withdrawals
To determine which of the factors above are the most important to you, think about how you expect to use the account, such as the minimum balance you feel confident you can maintain and how often you’ll want to take funds out of the account.
Tip
If you’ve never opened an account somewhere other than your primary bank or credit union, you may worry that top-paying small institutions or online-only banks are riskier, or that it will be inconvenient. Fortunately, your funds are as protected as they are at any federally insured institution, regardless of size or whether it has branches. And though transferring funds between institutions can take one to three days, today’s online banking systems make transfers very easy.
How to Open a Money Market Account
Once you’ve decided which money market account is best for you, opening the account should be pretty straightforward and will follow the same process as opening a savings or checking account.
- Start the online account opening process: Most institutions allow online account opening, so look for an “Open Account” button or a link on the institution’s website.
- Provide personal information: Fill in all of the information asked of you on the online application. Note that you’ll be asked security questions to confirm your identity.
- Upload required documents: The process varies from institution to institution, but most will ask you to provide a copy of identification, such as a photo or scan of your driver’s license. Some banks will ask for this within the online account opening process, while others may ask you to upload it or send it via secure message after you’ve submitted your application.
- Fund the account: Adding money your account may need to take place at the same time as you open the account, or may be able to be done later. If the money market account has a required opening deposit, you’ll be asked toward the end of the application process how you’ll fund your account. The most common way is via an ACH transfer from another bank, but other methods include a wire from another bank, sending in a paper check, or sometimes even charging a credit or debit card.
- Register for online banking: Once you’ve completed the account application, some banks will make online banking immediately available to you. But others may require some time to fully approve your application, providing the info you need for online banking within a few days of your completion of the application.
Financial Advisor Insight
“Before opening a money market account, make sure it fits your financial game plan,” said Ryan Greiser, CFP, a member of Investopedia’s Financial Advisor Council. “Money market accounts are great options when you want easy access to your cash, but there are a few factors you need to weigh.”
“Look at the APY,” Greiser said. “While it’s tempting to chase the highest rate, make sure you understand the account’s terms—minimum balance requirements, withdrawal limits, and potential fees can erode your gains. Fees and restrictions vary by institution, so you want to be sure the account isn’t costing you more than it’s earning.”
Alternatives to Money Market Accounts
Here are a few additional options to consider instead of, or in addition to, putting funds in a money market account.
MMA vs. Traditional Savings Account
Money market accounts tend to pay a higher return than traditional savings accounts. A money market account may require a larger initial deposit or ongoing balance—or both—than a standard savings account, but not always, so shop around. Money market accounts will also allow you to write checks, which traditional savings accounts do not offer.
MMA vs. High-Yield Savings Account
High-yield savings accounts and money market accounts are fairly interchangeable, with the only specific difference being that money market accounts offer check-writing. If you don’t care so much about writing paper checks, then it’s smart to shop the best high-yield savings accounts, as they often pay higher APYs.
MMA vs. Certificate of Deposit (CD)
If you know you can live without a portion of your savings for months or years, you can often earn more by opening a certificate of deposit (CD). That’s because banks and credit unions typically offer a higher APY on CDs in exchange for your agreement that you’ll keep the funds in the CD until it matures. Another advantage of CDs is that their rate is fixed. If interest rates drop in the future, your money market rate will drop as well, but a CD rate is locked for the full CD term. Note that early withdrawals from a CD will trigger a penalty, but for some, this is a useful tool for thwarting the temptation to spend your savings.
MMA vs. U.S. Savings Bonds
Series EE bonds offer a fixed interest rate that you’ll know at the time of making your deposit decision, while I bonds offer a rate that changes every six months based on current inflation levels (hence, the name I bonds). These investments are exceptionally safe, but note that they do not, for any reason, allow a withdrawal within the first 12 months.
MMA vs. U.S. Treasuries
T-bills allow you to lend money to the U.S. government for a short, fixed amount of time. Considered one of the safest investments in the world, T-bills offer durations ranging from four weeks to one year.
Why You Should Trust Us
Investopedia has been researching bank deposit rates from over 200 nationwide banks and credit unions every weekday since 2019. We have been publishing our ranking of the best money market accounts since 2021. When ranking money market accounts, we ensure the institutions meet our requirement of being federally insured by the FDIC or NCUA, and we research the basic account features, such as minimum required balances, any fees, and other factors that will help readers choose the account that will best meet their needs. Launched in 1999, Investopedia has been helping readers find the best savings account and CD rates since 2019, and the best money market accounts since 2021.
Frequently Asked Questions
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The best money market accounts currently offer over 4.00% APY, although they’re liable to change at any time. Every business day, Investopedia updates the list above to show the top MMA rates from nationally available banks and credit unions. You can check this list anytime to see the best money market account rates currently available.
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Your earnings from a money market account depend on the average daily balance you hold in the account and the exact APY your account is paying. But we can make an estimate of what you’d earn if we assume an interest rate of 5.00% APY. On a $50,000 balance held in the account for one year, your earnings would be approximately $500, or roughly $41 per month. If you’re lucky enough to have a $100,000 balance in the account, your earnings would be about $5,000 for the year, or about $416 per month.
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Certificates of deposit (CDs) and money market accounts each have their pros and cons—neither is inherently better. CDs provide a fixed interest rate for a set duration, so they’re a great way to lock in a high APY for a long time. But if you withdraw the money before maturity you’ll pay a strict withdrawal penalty. They’re an especially good choice if you won’t need to access your money for a while, and they’re a good option if rates are expected to fall. MMAs have variable rates, which can be changed anytime, but they allow you to withdraw your money with no penalty. So, they’re a better choice if you’ll need access to your savings.
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You don’t pay taxes on the money you deposit into a money market account, but instead, on the interest you earn. Interest earned in money market accounts, savings accounts, CDs, and high-yield checking and savings accounts is subject to taxes when it’s a total of $10 or more.
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Money market accounts are exceptionally safe. First, every money market account on our list is federally insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA), with coverage up to $250,000 per depositor and per institution. FDIC and NCUA insurance works exactly the same regardless of the size of the institution. So banking with a bigger or smaller bank does not change your risk for deposits up to $250,000.
Second, even if your money market account is offered by an online bank, you’ll have federal protection there, too. If the bank is simply an online division of an existing brick-and-mortar bank that’s FDIC-insured, then the online division is also protected. And even if the bank is internet-only, it likely is an FDIC member as well.
Third, money market accounts are not investment accounts. They are deposit accounts. So the money you put in always belongs to you and cannot lose value, aside from any banking fees or drops in interest rates you may encounter.
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The biggest drawback to putting your savings in a money market account is that the rate is not guaranteed. What you earn will be at the mercy of general interest rate fluctuations, so your money market rate can be expected to fall once the Federal Reserve starts lowering the federal funds rate. In contrast, money put in a CD will earn a fixed and guaranteed rate until the end of the certificate’s term.
Some money market accounts put a limit on the number of withdrawals you can make. If you choose one of these accounts with restrictions, a downside could be that you’re not able to withdraw funds as freely each month as you may like.
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Money market account rates are variable and can change over time. Like with savings and CDs, they are influenced by the Federal Reserve’s monetary policy. When the fed funds rate is high, money market accounts are more likely to be high. When the fed cuts rates, they are likely to decline. With the Fed expected to make rate cuts in 2025 now that inflation has slowed, money market account rates will be lower in 2025 than they were in 2023 and 2024.
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We regularly review the rates of the following FDIC banks and NCUA credit unions: 5Star Bank, All America Bank, Ally Bank, Amalgamated Bank, American Heritage Credit Union, BankUnited, Bellco Credit Union, Bethpage Federal Credit Union, BluPeak Credit Union, Brilliant Bank, Chevron Federal Credit Union, CIT Bank, ConnectOne Bank, Connexus Credit Union, Dept of Commerce Federal Credit Union, Digital Federal Credit Union, Discover Bank , EverBank, Finworth, First Capital Bank, First Foundation Bank, First Internet Bank, Forbright Bank, Genisys Credit Union, Hanscom Federal Credit Union, Hughes Federal Credit Union, Ideal Credit Union, KS StateBank, Latino Federal Credit Union, Luana Savings Bank, Merchants Bank of Indiana, Mountain America Credit Union, MutualOne Bank, My eBanc, MYSB Direct, Nationwide by Axos, nbkc bank, Northern Bank Direct, Northpointe Bank, Pen Air Credit Union, PenFed Credit Union, Presidential Bank, Prime Alliance Bank, Princeton Federal Credit Union, PSECredit Union, Quontic Bank, Redneck Bank, Republic Bank of Chicago, Sallie Mae Bank, Seattle Bank, Self-Help Federal Credit Union, Spectrum Federal Credit Union, Summit Credit Union, Synchrony Bank, TAB Bank, The Federal Savings Bank, UFB Direct, U.S. Bank, USAlliance Financial, Utah First Federal Credit Union, Webster Bank, and Zeal Credit Union.
How We Find the Best Money Market Account Rates
Every business day, Investopedia researchers and fact-checkers track the rate data of more than 60 banks and credit unions that offer money market accounts to customers nationwide, resulting in a daily ranking of the top-paying money market accounts. To qualify for our list, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. The account also must allow check-writing.
Banks and credit unions must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. If the account is accessible only through a mobile app, we require that the app be available on both the iOS and Android platforms.
Investopedia was founded in 1999, and our coverage of the best money market accounts began in 2019. For more about how we choose the best money market accounts, read our full methodology.
