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Infographic: All You Need to Know About Money Market Accounts

What is a money market account? A money market account is a unique account that blends the best features of checking and savings accounts while offering your money a real chance at growth.

A money market account can be an extremely useful financial tool, but many people are not familiar with them or how they work. Here, we will walk you through the basics of money market accounts: what they are, why they are a good option, potential uses for one, and how to manage a money market account. Download the full infographic for a quick, simple guide on the fundamentals of a money market account.

What is a Money Market Account?

A money market account is a unique account that blends the best features of checking and savings accounts while offering your money a real chance at growth. Both banks and credit unions offer money market accounts. Money market accounts generally come with more restrictions than checking accounts, such as limited withdrawals per month, but are more flexible than long-term deposit accounts that won’t allow access to your funds for a set term. At the same time, money market accounts also usually offer better rates than a traditional checking account, so you get better returns. This combination provides a great balance of growing your funds while allowing you access to them.

Why Open a Money Market Account?

  • interest rate icon

    Higher rates than traditional checking accounts. According to national FDIC data from January 16, 2024, the average checking account interest rate is 0.07% APY, while USALLIANCE offers MyLife Money Market accounts with APYs as high as 0.6% - almost 10x more.

  • Debit card icon

    Increased flexibility, often offering a set number of withdrawals per month. While a Certificate Account, for example, locks your funds in for a predetermined amount of time, with a money market account, you can access your funds a certain number of times each month.

  • Shield icon

    Security and stability that is unaffected by market conditions. In a lot of cases, choosing between different financial instruments means choosing between returns and reliability. The account that offers better returns involves more risk, while the safer option doesn’t offer a very good rate. With a money market account, you get the higher interest rate but you’re not exposed to the risk of market volatility.

  • Dollar sign icon

    Low or no minimum balance requirements. Most financial institutions have money market accounts available with a low minimum balance requirement, or even none at all. USALLIANCE offers MyLife Money Market accounts that are grouped into savings rate tiers based on the balance of your account. There is no minimum to open one, and whenever your balance reaches the next tier, your rate automatically moves up.

What Should I Use a Money Market Account For?

A money market account can be used for a lot of wide-ranging purposes because of the flexibility offered by the account. Whether you’re using the account as a vehicle to save up for a big purchase or spending your funds directly from the account, there are a lot of great ways to use your money market account. Here are some examples:

  • Gift

    Occasional expenses

  • Graduation cap

    Tuition payments

  • Household repairs needed

    Emergency household repairs

  • Cash money

    Unexpected medical fees

  • Automobile

    Purchasing a new car

  • Tax bill

    Tax and/or insurance premium payments

  • Airplane

    Annual vacation

How Do I Manage My Money Market Account?

Managing your money market account doesn’t require any advanced knowledge or complex tricks. Since the account isn’t subjected to market conditions, you don’t need to constantly check up on how your funds are doing or worry about the value dropping. However, there are some basic things to pay attention to, as there are with any financial account:

  • Keep your account well-funded at all times to avoid penalties and fees. Some financial institutions may assess penalties and fees if your money market account falls below a certain amount. If you’re spending the funds from your money market account, keep an eye on the balance and make sure you don’t drop below the acceptable level.

  • Build your balance over time by automating monthly transfers and watching your money grow. If you’re using the money market account as a way to save for the future, you may want to consider monthly deposits. As with any account used for savings, automating the transfers can make it easier. With USALLIANCE, your rate will also get better each time you climb to a new rate tier, so those monthly deposits can end up earning you even more.

All you need to know about Money Market Accounts. This infographic walks you through the basics of money market accounts- what they are, how they work, and how they can benefit your financial situation!