Is a Money Market Account Worth It for You? Here’s What to Consider.

If you’re exploring your savings options for the first time—or have already done some research—the benefits of a money market account (MMA) may still be unfamiliar to you. But if you’re looking for a possible way to get the most out of your money, those benefits are well worth learning about. Here’s a quick primer on how an MMA works—and why it might be right for you.

What is a money market account?

A money market account is an interest-bearing account offered by banks and other financial institutions that functions as a hybrid between a savings account and a checking account, often with higher interest rates than a typical savings account. These interest rates are variable, so they can rise and fall. In addition, funds in MMAs are federally insured by the Federal Deposit Insurance Corporation (FDIC). (This does not apply to money market mutual funds, which are an entirely different product.)

In addition, unlike most savings accounts, a money market account can be used as a checking account—for writing checks,* withdrawing money and making debit card transactions. In the past, Federal Reserve Regulations have restricted the number of transfers and electronic payments an MMA accountholder may make in a month—although you can deposit money into an MMA as often as you wish. (The rules limiting transfer and payments were relaxed in 2020 to mitigate the financial impact of COVID-19, but they may return in the future, and individual financial institutions may have their own rules.)

What are the pros and cons of a money market account?

One of the greatest advantages that a money market account offers is flexibility. Because you’re able to make a limited number of transfers from your money market account without penalty, it’s a good way to put money away “just in case.” Your money market account earns interest, and you can make a payment from it, if necessary. In the meantime, you also benefit from the safety provided by FDIC insurance, along with competitive interest rates that are often better than what you can earn with an ordinary savings account.

Still, a money market account requires a commitment to saving in order to be effective. If you can’t be reasonably certain that you’ll be able to leave the money in your MMA untouched, an interest-bearing checking account may be a better idea for you in the long run. Otherwise, you could find yourself paying penalties for excessive transfers from your MMA.

Depending on your financial institution, you may also face a minimum balance requirement for starting an MMA, or a minimum balance to secure the best available interest rate.

Why might a money market account make sense for you?

The flexibility of a money market account makes it a good fit for emergency funds, or for setting aside money towards a major purchase (like a pre-owned car bought with cash, or the down payment on a home). It’s also good for earning interest comparable to that from a certificate of deposit, but without the fixed time commitment and early withdrawal penalties.

If you have decided that a money market account is right for you, you may want to consider a High-Yield Money Market Savings Account from BrioDirect. With great interest rates, FDIC insurance, and a simple application process, it’s an excellent way to give your savings an extra boost. There are no monthly maintenance fees, wire-in fees, or minimum balance requirements, and online and mobile banking gives you easy, convenient access to your money around the clock.

Still have questions? The BrioDirect team is here for you. Contact us to learn more, or apply for our High-Yield Money Market Savings Account now.

* The Brio MMA Savings account does not come with checks or a debit card, but can be linked to a checking account with a debit card for all your payment needs.