Best Money Market Accounts of January 2025: Rates Up to 5.00%

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10 Best Money Market Accounts of 2024

There are plenty of money market accounts to choose from, but these stand out for their unique features and competitive APYs. Whether you’re looking for the highest money market rates or the most flexible access, start by comparing the options below.

What Is a Money Market Account?

A money market account is an interest-bearing account offered by banks and credit unions. They are similar to savings accounts because you can deposit and withdraw money as needed and earn interest. But money market accounts are also similar to checking accounts because many providers let you pay bills and manage your funds through check-writing or debit card privileges.

Money market accounts are more versatile than certain other banking products, such as CDs. When you need access to your money, you can easily withdraw funds from a money market account without facing early withdrawal penalties. Be aware, however, that banks and credit unions often set limits on the number of withdrawals you can make per month for free from money market accounts (typically six). If you go above the limit then you may have to pay a withdrawal fee.

Like most traditional banking products, money market accounts are secured by FDIC insurance limits of up to $250,000 per depositor.

What Are the Differences Between a Money Market Account and a Standard Savings Account?

While they’re similar, a money market account and a savings account have some key differences. Overall, money market accounts typically have higher interest rates, higher minimum balance requirements and more ways to access your money. However, both are similar in their transaction limitations and FDIC insurance. Here’s a closer look at how the two compare.

	Money market account	Savings account
Interest rates	Higher, fluctuate more often	Lower, potentially more stable
Minimum balance requirement	Typically higher	Typically lower or none
Access to money	Check writing, debit card and online transfers	Online transfers
Monthly withdrawal limit	Varies, but often capped at 6	Varies, but often capped at 6
Federal Deposit Insurance Corporation (FDIC) Insurance	$250,000	$250,000

How Do Money Market Accounts Work?

When you first open your money market account, you must fund it with cash, check or funds transferred from another account. Once you’ve established your account, you can use it as you would use a checking or savings account.

Money market accounts earn an annual percentage yield (APY), which is the total amount of interest you earn over one year. APY shows you your total earning potential—not just the interest you earn on the money you put into the account but also the interest that gets added to your balance. This is slightly different from a simple interest rate, which is how much you earn on the original amount.

The financial institution publishes the APY, so you’ll know it upfront. Generally, most institutions pay interest monthly and as your account matures, you start earning compound interest.

What Is a High-Yield Money Market Account?

High-yield money market accounts earn a higher-than-average APY compared to a standard savings account. In some cases, the APYs are 13x the national average published by the FDIC. So it’s worth it to shop around and compare money market rates. Generally speaking, you’re more likely to find these with online banks, which can pay higher rates because of their lower overhead.

Who Should Get a Money Market Account?

Anyone who needs a safe, FDIC-insured place for their savings but also wants the accessibility and convenience of a checking account should consider a money market account. The higher APY offers an opportunity to tap into the power of compounding interest and potentially higher earnings compared to traditional savings accounts. It’s a good option for someone who is unsure when they might need their funds, such as when saving for a future vacation or down payment on a new home.

How To Choose a Money Market Account

Not all money market accounts are created equally, and there can be stark differences between one financial institution and another. As you’re making your selection, focus on the features that matter most to you to see how the best money market accounts compare.

Accessibility

One of the hallmark features of a money market account is the accessibility, but each financial institution has its own level it offers account holders. If check writing and debit card privileges are important to you, then confirm that they’re offered. Also look to see how easy it is to transfer funds from one account to another, including external accounts.

Fee Schedule

The fees can add up quickly with a money market account. Make sure to determine whether there are monthly fees, withdrawal fees, transfer fees or out-of-network ATM fees.

Withdrawal Schedule

Pre-COVID, the federal Regulation D limited the number of money market withdrawals to six per month, but then lifted these restrictions (and are still no longer in place as of publishing). But financial institutions can still limit the number of withdrawals each month or tack on fees if you withdraw a certain amount.

Minimum Balance Requirement

Not only are these accounts subject to a minimum opening balance, but you may have to maintain a minimum balance each month to avoid fees. It’s also worth noting the higher APYs may only apply to certain tiers of balances.

How To Open a Money Market Account

Opening a money market account is similar to opening a checking or savings account. The first step is identifying what features are most important to you and narrowing down your selection from there.

Find out what the minimum opening balance requirement is for the account and how you can initially fund the account. You can open an account either in person or online, depending on the structure of the financial institution.

When you’re ready to open the account, you’ll need:

• A government-issued identification
• The routing and account number if your initial deposit comes from a checking account
• Your Social Security number

Pros and Cons of a Money Market Account

A money market account blends accessibility with potentially high earnings, but there are a few things to consider before you commit to this type of account.

Alternatives to Money Market Accounts

If you’re not sold on a money market account, there are plenty of alternatives for storing or investing your money.

• High-yield savings accounts: These are savings accounts that earn more than the average savings APY, helping to maximize your earnings. In many cases, they earn the same or more than money market accounts.
• Certificates of deposit (CDs): CDs are a type of savings account where you lock your money away for a set term at a fixed APY. The benefit is that your APY stays the same throughout the term, even if the market fluctuates.
• High-yield checking accounts: If what drew you to a money market account was the ability to write checks and pay bills, you might have more flexibility with a high-yield checking account. These earn more interest than a standard checking account, but they likely won’t earn as much as the best money market account rates.
• U.S. Treasury Series I bonds: Treasury bonds are sold by the U.S. government, so they’re a relatively stable investment. The interest rate fluctuates depending on the market, meaning you have the chance for extremely high APYs. You can cash out your bonds any time after a year, but if you don’t, they’ll keep earning interest for up to 30 years.
• IRA or 401(k): If your goal is to start saving money for retirement, an individual retirement account (IRA) or a 401(k) are better alternatives to a money market account. They’re less stable, as their value can go up and down depending on the market, but they offer the chance for much better returns.

Money Market Account vs. Money Market Mutual Fund

Money market accounts are deposit products that often earn a higher interest rate than a typical savings account. In comparison, money market mutual funds are a type of low-risk mutual fund. Money market funds invest in low-risk securities like cash equivalents, government bonds and Treasury bills. They’re designed to be a safe, stable way to hold money that you don’t want to expose to higher levels of investment risk.

Because these accounts are bought and sold like any other mutual fund, the money isn’t as easily accessible as it is in money market accounts. You’ll have to log into your brokerage account to make a withdrawal, and it could take several days to transfer the funds. Some money market funds allow you to write checks, or you can sell your shares to turn their full value back into cash.

Since money market mutual funds are offered by brokerages rather than banks, they are subject to SIPC insurance instead of FDIC insurance. SIPC provides coverage for up to $500,000 per brokerage account in the event your investment firm fails.

	Money Market Account	Money Market Mutual Fund
Type of Account	Deposit account	Mutual fund
Insured by	Federal Deposit Insurance Corp (FDIC)	Securities Investor Protection Corp. (SIPC)
Offered by	Banks and credit unions	Investment companies
Availability	Immediate access to funds	May take several days to withdraw the funds

Newsweek writer Jamie Johnson contributed to this post.