Can you pay bills from a money market account?
Yes, you can pay bills directly from a money market account if your bank offers this feature. Online bill pay services are typically free at banks and credit unions, though you may want to review your account agreement to ensure you won't be charged a fee for paying bills from your money market account.
Money market accounts come with other perks too, though. Like a checking account, you can write checks, make online bill payments and withdraw funds with an ATM card. However, you are limited to only six transactions a month by federal regulation (these don't include ATM withdrawals).
A money market mutual fund account is considered an investment, and it is not a savings or checking account, even though some money market funds allow you to write checks.
Money market accounts don't have time limits or terms. You can deposit or withdraw money from the account at any time, though there may be limits on how many withdrawals or transfers you can make in a single statement period.
Money market accounts are ideal for storing funds for shorter-term savings goals, such as saving up for a new car or a vacation. You'll not only earn interest on your savings, but you'll also be able to conveniently make payments directly from your account.
Yes, you can pay bills directly from a money market account if your bank offers this feature. Online bill pay services are typically free at banks and credit unions, though you may want to review your account agreement to ensure you won't be charged a fee for paying bills from your money market account.
Indirectly losing money, however, is a downside of money market accounts. Indirect loss can occur if the interest rates tied to the account fall, thus diminishing the initial return value of your account.
| Account | National average money market account | Sallie Mae Money Market |
|---|---|---|
| Deposit amount | $10,000 | $10,000 |
| APY | 0.68% APY | 4.65% APY |
| Earnings after six months | $33.94 | $229.86 |
| Earnings after 1 year | $68 | $465 |
Account holders are generally limited to six withdrawals from a money market account each month, which affects how many checks can be written from the account.
Six to 12 months of living expenses are typically recommended for the amount of money that should be kept in cash in these types of accounts for unforeseen emergencies and life events.
Can money be lost in a money market account?
Since money market accounts are insured by the FDIC or the NCUA, you cannot lose the money you contribute to the account—even in the event of a bank failure. You can, however, be subject to fees and penalties that reduce your earnings.
Is Your Money Ever Stuck in a Money Market Account? A common misconception is that money in an MMA can be stuck for a set time. However, the beauty of MMAs lies in their liquidity. Unlike certain investments with lock-in periods, MMAs offer flexibility.
Generally speaking, money market accounts are very safe. At banks, money market account balances are insured by the FDIC, and at credit unions, balances are insured by the NCUA. Both the FDIC and NCUA insure up to $250,000 per depositor, per account ownership category per insured institution.
A money market account is an interest-bearing account that's similar to a savings account, but money market accounts commonly allow you to pay bills, use a debit card and write checks. Like savings accounts, money market accounts feature variable interest rates.
Federal regulations that govern savings account withdrawals don't apply to ATMs. So you can make unlimited ATM withdrawals from your money market account without penalty. Many banks also let you to write a limited number of checks from your money market account. You can't do this with most savings accounts.
Taxable money market funds, also known as prime money market funds, usually offer higher yields than tax-exempt funds, but any income is subject to taxes. Prime funds invest in corporate and bank debt issued by U.S. and international entities.
Money market accounts provide access to funds and offer interest rates similar to regular savings accounts. CDs earn more interest over time but have restricted access to funds until maturity. Money market accounts are a better option when you need to withdraw cash.
There was a time when all money market accounts had withdrawal limits — generally six but sometimes fewer per statement cycle. That all changed on April 24, 2020, when the Federal Reserve deleted its rule limiting certain withdrawals and transfers to six per monthly statement cycle.
If you're saving for something you'll need the money for in less than three to five years, saving in a money market fund may make sense for you. Money market funds are ideal for short-term saving because they invest in highly liquid securities with the objective of capital preservation and income.
For example, you often won't earn as much with a money market account as you would with a traditional CD because the CD has a time commitment: The bank will pay you more in exchange for locking up your funds longer. Keep the possible trade-off of a lower yield in mind when you're thinking about opening an account.
What is better than a money market account?
Money market accounts offer flexibility with check-writing and debit cards, savings accounts are more accessible and have lower fees, and CDs offer higher interest rates but with a commitment to keep your money locked away for a set period of time.
Key takeaways
Money market accounts are a type of deposit account that earns interest. Rates are often higher than traditional savings accounts. Money market accounts typically limit your withdrawals per month and have a higher minimum balance requirement than traditional savings accounts.
- As of May 2024, no banks are offering 7% interest rates on savings accounts.
- Two credit unions have high-interest checking accounts: Landmark Credit Union Premium Checking with 7.50% APY and OnPath Credit Union High Yield Checking with 7.00% APY.
- Redneck Bank – 4.90% APY.
- First Foundation Bank – 4.90% APY.
- Sallie Mae Bank – 4.65% APY.
- Prime Alliance Bank – 4.50% APY.
- Presidential Bank – 4.37% APY.
- EverBank – 4.30% APY.
- BankUnited – 4.25% APY.
- U.S. Bank – 4.25% APY.
| How Much Do Americans Have in Their Savings Accounts? | ||
|---|---|---|
| $501-$1,000 | 11.30% | 12.58% |
| $1,001-$2,000 | 10.60% | 9.81% |
| $2,001-$5,000 | 10.60% | 10.64% |
| $5,001-$10,000 | 9.20% | 9.51% |
