Money Market Accounts
A money market account is a hybrid account. It pays better interest than checking, gives more access than savings, and is designed for larger balances.
What Is a Money Market Account?
A money market account (MMA) is a type of bank account that combines features of both savings and checking accounts. You usually earn higher interest than checking and may get limited access through checks or a debit card.
Think of it like this:
Checking = easy access, almost no interest
Savings = less access, more interest
Money market = middle ground
How It Compares
Money market accounts often pay similar interest to high yield savings accounts, but usually require a higher balance to avoid fees.
Money market accounts earn much more interest than checking, but are not meant for everyday spending.
Important Rules to Know
Usually requires a higher minimum balance (often $1,000–$2,500)
Limited number of withdrawals per month
Often includes checks or a debit card, but should not replace checking
Interest rates can change at any time
When a Money Market Account Makes Sense
You have a larger balance and want better interest than checking
You want to keep money safe and accessible, but not spend it daily
You are saving for a short term goal (like a car or big purchase)
Your bank offers a strong rate with low or no fees
What to Watch Out For
Common mistakes
- Using it like a checking account and hitting withdrawal limits
- Not meeting the minimum balance and paying fees
- Assuming it is an investment (it is not)
Is a Money Market Account Safe?
Money market accounts at banks are usually FDIC insuredup to $250,000, just like checking and savings accounts. That means your money is protected if the bank fails.
Key Takeaway
Money market accounts are useful once you have a larger balance and want better interest without locking your money away. For most teens, a checking account plus a high yield savings account is enough. Money markets make sense later, when balances grow.