You’ve probably heard the story of Goldilocks and the Three Bears. The golden-haired girl tried Papa Bear’s porridge (too hot), Mama Bear’s porridge (too cold), and finally Baby Bear’s porridge, which was just right. When it comes to banking options, a money market account might be your “just right"—a financial middle ground offering the solid returns of a savings account with the convenient access of a checking account.
But before you choose a money market account, it’s important to understand how it works and the pros and cons compared to other banking options.
READ MORE: What is a Money Market Account and How Does it Work?
What Is a Money Market Account?
A money market account (MMA) is a hybrid between a savings and a checking account. As with savings accounts, deposits in an MMA earn interest. But you can access your money through checks or a debit card, just like you do with checking accounts. Some MMAs may have a minimum balance requirement or restrict the number of transactions you can perform each month.
Pros of Money Market Accounts
Here are some of the benefits you can expect from MMAs.
Competitive interest rates
With higher annual percentage yields (APYs) than most traditional savings accounts, MMAs allow your deposits to earn more interest income. That means your money isn’t just sitting—it’s growing, thanks to the magic of compound interest.
Convenient access
Need to pay for a big-ticket item like a new appliance or a car repair? With an MMA, you may not need to transfer funds between accounts or face early withdrawal penalties (like with a CD account). Many MMAs let you access your money directly using a check, or in some cases, a debit card or ATM. That added convenience makes it easier to tap into your savings if needed.
Flexible deposits and withdrawals
You can make unlimited deposits into an MMA, which makes it ideal for growing your balance over time. For withdrawals, MMAs typically offer several convenient options—such as online transfers, check writing, debit card use or even ATM access—depending on the bank.
FDIC or NCUA deposit protection
If your MMA is held at a federally insured bank or credit union, your deposits are insured up to $250,000 per depositor, per institution, per ownership category by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). For joint accounts, each co-owner is covered up to $250,000, for a total of $500,000 in protection. That makes MMAs a great low-risk option for anyone looking for both security and steady growth.
Potential Drawbacks of Money Market Accounts
Look out for the following drawbacks that can come with some MMAs.
Minimum balance requirements
Some MMAs require a hefty deposit to open or maintain the account. Fall below the minimum required balance and your interest rate may drop—or worse, you may get hit with monthly maintenance fees. Not every bank has these requirements. For example, Synchrony Bank’s Money Market Account does not require a minimum balance and has no monthly fees, making it a more flexible option.
Withdrawal restrictions
Although the Federal Reserve no longer enforces the six-withdrawal-per-month rule on savings and money market accounts, many banks still impose their own limits. That means you might be restricted in how often you can make electronic transfers, write checks or use your debit card. Withdrawal rules vary by bank, so check the fine print to avoid surprise fees or declined transactions.
Variable interest rates
MMA interest rates aren’t locked in—they typically fluctuate with market conditions. That’s great when rates go up, but less exciting when they fall and give you lower returns. If you’re counting on consistent returns, a certificate of deposit (CD) account could be a better choice. Just keep in mind that your funds will typically be locked in for a fixed term, and early withdrawals may come with penalties.
Modest long-term returns
While MMAs usually provide higher yields than checking or traditional savings accounts do, they’re not designed for maximizing long-term growth. Other banking or investment options may offer better returns. For example, a high yield savings or CD account might be a better option, especially if you need check writing or frequent access to your funds. For medium- to long-term savings goals, it’s worth comparing rates and considering how much liquidity you need.
Bottom Line: Is a Money Market Account Right for You?
Opening an MMA can be a smart choice if you want a safe, accessible place to stash your cash—while also earning more interest than with a typical savings account. With check writing, debit card access and deposit insurance, MMAs offer a level of convenience and security that many other savings products can’t match. That said, it’s important to consider any fees and restrictions that can cut into your earnings, so be sure to shop around.
Find out more about Synchrony’s Money Market Account, which has no minimum balance and no monthly fees.
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