Are you ready to open a money market account but don’t know where to start? Here’s how to choose, apply for and open an MMA easily so you can focus on what’s most important: building your savings.
Quontic Bank Money Market Account
Annual Percentage Yield
5.00%
Minimum Deposit Requirement
$100
Monthly Maintenance Fee
$0
5.00%
$100
$0
What Is a Money Market Account?
Money market accounts (MMAs) are a type of savings account that makes it easier to access cash when you need it. MMAs combine savings and checking account features, allowing you to earn interest and access cash with check-writing and debit card privileges.
Unlike checking accounts, you often can’t make more than six monthly withdrawals from a money market account, though many banks and credit unions stopped enforcing this rule during the Covid-19 pandemic.
Money market account annual percentage yields (APYs) are higher than checking accounts but similar to savings accounts. The best high-yield savings accounts may offer higher rates than the best money market accounts, but it’s not as easy to access cash.
How To Open a Money Market Account
Money market accounts are available at most banks and credit unions. Here’s how to open one.
1. Shop around
Money market rates and features vary by financial institution, so weighing your options is crucial. Here’s what to look for when comparing money market accounts.
- Annual percentage yield (APY): APY is the total interest you earn on your savings over the course of a year, expressed as a percentage rate. Banks may offer different APYs depending on the size of your balance, with higher balances generally earning higher APYs.
- Fees: Limiting money market account fees is important, as they can eat into your earnings. Watch out for monthly maintenance fees, ATM withdrawal fees and fees for falling below a minimum balance requirement.
- FDIC insurance: Deposits you make at an FDIC member bank are insured up to $250,000 per depositor per account category. That means you won’t lose your savings if the bank goes under. For credit unions, the equivalent of FDIC coverage is National Credit Union Association (NCUA) coverage.
2. Gather the necessary documents
Whether you’re applying for a money market account online or in person, the bank will need to collect basic information to determine your eligibility. It will ask for a valid government ID, such as your driver’s license or passport, as well as your address and Social Security number.
If you’ve had banking issues in the past, it’s a good idea to order a copy of your ChexSystems report. The report includes a detailed history of your banking activity, including overdrafts and unpaid balances. This helps ensure there are no delays in processing your money market account application.
3. Make an opening deposit
Some banks require you to deposit money when you open a money market account, while others let you open the account and deposit money later. Minimum deposit requirements vary widely, with some banks not requiring any upfront deposit and others requiring $1,000 or more. If you can swing a larger deposit, you may receive a higher APY.
How To Open a Money Market Account Online
Opening a money market account online is similar to opening an account in a branch. First, you’ll want to compare accounts at a few different banks and credit unions to find the best one. Then, you can go to the bank’s website to find the application. Online applications will prompt you to log in if you’re an existing customer or create a profile if not. To verify your identity, you’ll provide your Social Security number and may need to scan or upload a picture of your ID.
Once your account is approved, you can link an external bank account to initiate a transfer and make your opening deposit.
How To Choose a Money Market Account
To choose a money market account, set aside time to research your options. Aside from fees, interest and minimum balance requirements, you’ll want to consider account features such as check-writing capabilities, ATM access and withdrawal restrictions. Every bank and money market account is different, especially when it comes to how you access funds, and taking the time to compare accounts and find one that’s right for you is worth it in the long run.
Where To Open a Money Market Account
Banks
Many traditional brick-and-mortar banks offer money market accounts, making these MMAs a great option if you want access to branches and ATMs. Citizens Bank has its Citizens Bank Personal Money Market Account with no minimum balance requirements. There’s a $10 monthly maintenance fee on balances less than $2,500, but the charge is waived if you have a Citizens Quest™ Checking or Citizens Wealth™ Checking..
Credit unions
Credit unions are another option to consider for money market accounts. Connexus Credit Union offers its Connexus Credit Union Money Market Account with no monthly maintenance fee, but it has a $1,000 minimum deposit requirement. It’s also worth checking out local credit unions, especially if you prefer in-person banking services.
Online banks
Online banks tend to offer higher APYs than traditional banks and credit unions. The money market account at Ally Bank currently offers a generous APY on all balance tiers and charges no monthly service fees. Remember that APYs are variable, which means they could go up or down based on market conditions.
Find The Best Money Market Accounts Of 2024
How Much Money Should You Put in a Money Market Account?
How much money to save in a money market account depends on several factors. If the money market account has a balance requirement, you should save at least the minimum to avoid fees.
If you’re using a money market account to save for emergencies, most experts recommend having six to 12 months of living expenses saved up. If you don’t have a large amount to deposit at once, make your initial deposit, then set up automatic transfers into the money market account to grow your savings.
What Is a Good Return on a Money Market Account?
A good return on a money market account is any rate above the national average. According to the latest data from the FDIC, the national average money market rate is 0.29%. Many online banks offer rates that are more than 10 times higher than this average.
Should I Open a Money Market Account?
Money market accounts are a worthy choice for earning interest on savings while still being able to access your cash when you need it. They are particularly valuable when used to hold your emergency fund or park cash for short-term goals, such as a down payment on a home or a vacation. If you can find an account with low fees, generous rates and a minimum balance requirement you can meet, opening an MMA is easy and often worth it.
Find The Best Money Market Accounts Of 2024
Frequently Asked Questions (FAQs)
Is it safe to open a money market account?
It is perfectly safe to open a money market account, as long as you open an account at a federally-insured bank or credit union. FDIC insurance protects bank deposits and NCUA insurance protects credit union deposits up to $250,000 per depositor, meaning anything you save up to this limit is guaranteed.
How do you calculate money market interest?
Typically, interest on money market accounts is calculated daily on your total balance and credited to your account monthly. Money market interest rates are often variable and may be tiered, meaning your rate will be determined by your average daily balance. Use our savings interest calculator to find out how much you could save.
What does a money market account do?
A money market account is a deposit account with features of both checking and savings accounts. You earn interest and may have withdrawal restrictions like a savings account but can receive a debit card or checks like a checking account. Money market accounts may offer higher rates than traditional savings accounts, making them ideal for saving.
