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Why the best money market rates matter
Your funds grow faster in a high yield account. The average money market rate is a fraction of apercent, while the best money market accounts earn rates that are many times higher.
What is the difference between a money market account and a standard savings account?
A savings account is a type of deposit account offered by a financial institution that typically earns interest. A money market account is also a type of deposit account, but it typically requires a higher minimum balance.
MMAs have traditionally earned higher interest rates compared to standard savings accounts, though recently some high-yield savings accounts have been offering better returns.
» Learn more about high-interest savings accounts
Some MMAs come with a debit card or checks — but institutions may require that they not be used more than about six times per month.
A high-interest savings account earns attractive rates, but typically does not have debit card or check-writing access. However, savings accounts generally have similar limit restrictions for some types of withdrawals, such as online transfers.
The main reason to open a money market account is to have a higher interest rate compared to a traditional savings or checking account, while also having the ability to write a few checks.
» Curious about the difference between money market accounts, basic savings and CDs? Check out NerdWallet's primer on types of savings accounts
Are the best money market accounts insured?
Yes, as long they are deposit accounts that come from a bank or credit union that is federally insured. You can find federally insured accounts at traditional brick and mortar banks and online banks. The Federal Deposit Insurance Corp. insures deposits up to at least $250,000. If the account is with a credit union, the account will likely be federally insured through the National Credit Union Administration, also up to at least $250,000.
If a bank or credit union were to fail and go out of business, you would not lose the money you have in the money market account, up to the insured amount. Note that this is different from funds held in money market mutual funds, which are not federally insured.
» Want to know more about how your money is protected? Read how FDIC and NCUA insurance programs work.
The difference between a money market account and a money market mutual fund
A money market account is a federally insured account that earns interest. A money market mutual fund, on the other hand, is an investment in short-term debt. It is considered low risk but doesn't have a guaranteed return.
» Learn more about both by reading NerdWallet’s guide on money market mutual funds
Top savings options
These days, there isn’t always much difference between the rates paid by money market accounts and the best savings accounts. If you don’t need checks or a debit card, you might consider one of these federally insured accounts, which also pay great rates.
Bask Interest Savings Account, 5.10% APY (read full review).
LendingClub High-Yield Savings, 5.00% APY (read full review).
Capital One 360 Performance Savings, 4.25% APY (read full review).
