A money market account (MMA) is an interest-bearing account at a bank or credit union, and it usually offers higher interest rates than traditional savings accounts. The way money market accounts differ from traditional savings accounts is that they sometimes allow check-writing privileges and come with a debit card that can be used to access money at an ATM. Because they offer a higher level of liquidity you won't find in other savings accounts, like CDs, they’re a good option for short-term savings goals or savings you’ll need to access regularly.

Money market accounts vs. savings accounts

How are money market accounts different from traditional savings accounts? Money market accounts can be good alternatives to traditional savings accounts, as they typically offer a higher APY on balances, although they may not offer as high of yields as some of the high-yield savings accounts on the market. 

How are money market accounts different from CDs?
Money market accounts and CDs vary in a few ways. The main one is that in an MMA, your cash is accessible. Cash in a CD, on the other hand, can't be accessed until the term is over, or you’ll risk incurring a hefty fee. Another way money market accounts and CDs differ is that CDs offer a fixed rate that can be locked in — which is ideal when rates are high. Yields on money market accounts are typically variable. 

Choosing a money market account

Here’s what to consider when deciding to open a money market account. 

Decide what your savings goals are: What do you plan on using the funds for and when? Money market accounts are good options for those looking to save cash where it will earn interest while still being accessible, such as setting up an emergency fund.

Shop around: You’ll then want to compare banks and credit unions to find one best suited for your needs. Taking into consideration the APY on an account, as well as if it has check-writing or ATM access. Some accounts also have minimum deposit requirements and monthly fees you should also consider. 

Make sure your money is safe: When choosing a bank or credit union, you’ll want to make sure it is FDIC or NCUA insured

This article was written by Erin Bendig from Kiplinger and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

The opinions expressed within this article is that of Erin Bendig and not that of M&T Bank, nor does M&T Bank endorse the opinions.

This article is not intended to provide tax, legal, accounting, financial, or other professional advice. Always consult a qualified professional about your personal situation.