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Is a Money Market Account Right for You?

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If you've got money to invest and you're considering a money market account, you need to know about current money market rates and other key details. Will a money market account give you the best return for your money? Is it worth your time to start one? Learn more about situations that are favorable for this type of account.

What Is a Money Market Account?

A money market account essentially works like a savings account but pays a higher interest rate. Thanks to money market bank rates, you collect a larger return on your money while still having access to the funds like you would a checking account. Money market accounts come with debit cards and even checks, providing easy access to your cash. However, some accounts have certain limits, such as only allowing six check or debit card withdrawals before you're charged a fee. These accounts also require a little more to open, usually several hundred dollars at a minimum.

Advantages to Having a Money Market Account

These types of accounts have some advantages. For example, you get the best rates on your savings, as opposed to traditional savings accounts. Your money is insured by the FDIC or NCUA, depending on if the account is with a bank or credit union. A money market account allows you to diversify your money and get away from a basic checking account without losing access to your money or risking your investment. It offers the perfect stepping stone for new investors.

Why You Might Not Want a Money Market

In some cases, a money market account isn't the best option. If you want to put your cash in an account that can't be easily touched, a CD may be a better option. If you only have a couple hundred dollars to open an account, a traditional savings account might be the answer. If you expect to make frequent withdrawals, you may want to stick to a regular checking account to avoid fees. The best money market interest rates are nice, but these accounts won't handle every need.

Know What Is Best for a Money Market Account

Money market rates provide high interest with low spending for your financial needs. If you need to pay tuition or set aside money for emergency funding, a money market account is a good choice. Almost any situation that calls for saving a large sum of money with minimal monthly spending is suitable for a money market account. Be sure to plan ahead to put the best bank money market rates to work for you.