If you have a traditional checking and savings account, you may think you’re set, but a money market account could be another useful tool for managing your money. So, what is a money market account and how does it work?
To a certain extent, you can think of a money market account as a hybrid between a checking and savings account. Money market accounts function a lot like a savings account with limited checking account privileges. You’ll typically earn a variable rate of interest, as well.
Let’s find out when a money market account could be the right fit for you.
Pros and cons of money market accounts
Consider this list to determine if an MMA has a place in your financial picture.
Pros
Potentially higher interest rates: Compared to a savings account or checking account, money market accounts can often offer slightly higher interest rates.
Check writing options: Unlike a traditional savings account, you can use a money market account to write checks.
Debit card options: You may also get a debit card with a money market account, which can be an additional perk over a typical savings account.
Cons
Minimum balance requirement: Some banks require a minimum deposit to open a money market account. You might face a higher minimum balance requirement than your average checking or savings account.
Potential fees: Some money market accounts carry a monthly fee or charge fees for withdrawing money from non-affiliated ATMs, check writing, excessive withdrawals or not maintaining a minimum balance. Fees will vary across different banks, so always compare costs when shopping for a money market account and compare potential fees carefully.
Limited transaction options: Some financial institutions limit your transaction options, though federal requirements now allow financial institutions to decide whether they apply any withdrawal limits. This means instead of being limited to six savings or money market transfers or withdrawals per month, customers can make more or unlimited transfers or withdrawals, depending on the financial institution.
How do I open a money market account?
Once you decide a money market account is right for you, follow these steps to get started:
Step 1: Choose the right money market account.
Do research to learn about the fees, minimum balance requirements and the other rules that affect you, such as:
Annual percentage yield (APY): APY shows you how much you’ll earn on your savings in terms of interest. The higher your APY, the more you’ll earn in return.
Withdrawal methods: How can you withdraw money from your money market account? Can you access money by ATM, debit card or check?
Step 2: Apply for an account.
Next, it’s time to open your preferred account. When you open an account with Ally, you’ll need to provide your personal information like your name, birthdate, taxpayer ID or Social Security number, and address, as well as your occupation. You may also need to supply information about any joint owners and beneficiaries.
Step 3: Fund your new account and use it.
Finally, set up an initial deposit to meet the money market fund requirement if there is one. Don’t forget to request checks or a debit card if you plan on using those features. Your new money market account could earn a higher interest rate compared to a checking or savings account.
Difference between a money market account vs. other bank accounts
What’s the difference between savings accounts, certificates of deposit, or CDs, money market accounts and checking accounts? Take a look at a comparison chart of all four options.
Benefits | Money market accounts | Savings accounts | Checking accounts | CDs |
|---|---|---|---|---|
Insurance | Bank money market accounts: insured by the Federal Deposit Insurance Corporation (FDIC); credit union money market accounts: insured by the National Credit Union Administration (NCUA) (up to the maximum allowed by law) | Bank savings accounts: insured by the FDIC; credit union savings accounts: insured by the NCUA (up to the maximum allowed by law) | Bank checking accounts: insured by the FDIC; credit union checking accounts: insured by the NCUA (up to the maximum allowed by law) | Bank CDs: insured by the FDIC; credit union CDs: insured by the NCUA (up to the maximum allowed by law) |
0.59%, according to data from the FDIC | 0.38%, according to data from the FDIC | 0.07%, according to data from the FDIC | Varies, though a three-month CD returns approximately 1.43% and a 60-month CD returns 1.78% | |
Withdrawal restrictions | Financial institutions may place limits on how many withdrawals you can make during a single statement period. | May face withdrawal limits | N/A | May face withdrawal limits |
Minimum balance requirements | Varies, depending on the financial institution | Varies | Varies | Varies |
Check availability/checks per month | Varies, but typically allows limited number of checks per month | No checkwriting capabilities | Varies, but possible unlimited checkwriting availability | No checkwriting capabilities |
Access to funds | Varies, depending on the financial institution. May offer checks, debit card access, ATM, local bank branch access. You can make ACH transfers. | ATM, local bank branch access, bank and ACH transfers | Access through debit cards, local bank branch visits, ATM cards, ATM transfers and wire transfers | Local bank branch access, bank and ACH transfers |
Rates as of June 2025
Are money market accounts safe?
Money market accounts are generally considered safe instruments, and banks use the money to invest in liquid, stable, low-risk securities. Money market accounts of FDIC- or NCUA-insured financial intuitions are protected up to the maximum amount allowed by law. Keep in mind, money market accounts are not the same thing as money market funds, which are offered by investment companies and are not FDIC or NCUA insured.
If you want a saving option insured by a federal entity with check writing and debit card capabilities, a money market account might be a great option for you.
How do I choose the best money market account?
Shop around for the best money market account for your needs and get convenient access to your money. Ally Bank’s Money Market Account offers a competitive rate along with some other perks, including:
Unlimited ATM withdrawals for free at 75,000+ Allpoint® and MoneyPass® ATMs
Reimburse up to $10 per statement cycle for fees charged at other ATMs nationwide
No monthly maintenance fees
No minimum balance requirements
No overdraft fees
Can open and fund your account with any amount
Free standard checks and debit card
How do I know if a money market account is right for me?
If you want a savings account with the flexibility of a checking account (while potentially earning a slightly higher interest rate), consider a money market account. Check writing, competitive rates or using a debit card can give you flexibility whether you want to build an emergency fund or save for a vacation.
