Basics of Money Market Accounts

Money market accounts are deposit accounts, held at financial institutions, and share features of both saving and checking accounts. Typically, money market accounts will allow you to write checks, have a debit card, unlimited deposits, and share other features similar to checking accounts. They earn interest, similar to saving accounts but usually at a higher rate, and also restrict the number of monthly withdrawals as saving accounts do too.

Our Take.. Good or Bad?

There’s typically a minimum balance requirement for having a money market account open, otherwise the financial institution could charge a monthly fee for the balance being less than the minimum balance requirement. Every institution has their own minimum balance requirement though; some less, some more.

That being said, we recommend a money market account for your emergency fund, as long as you can maintain the minimum balance requirement.

As with saving accounts, the interest rate money market accounts offer is usually less than other investment choices. Money market accounts shouldn’t be used as an investment choice because of this. As said, they’re a solid choice for holding your 6-9 month emergency fund, rather than earning less interest in a saving account or even less in a checking account.