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What to Know Before Opening a Money Market Account

By: iTHINK Financial | Jun 06, 2018

Answering Your Questions about Money Market Accounts

Where do you keep your money? For most of us, the answer is a checking account, a savings account and perhaps a piggy bank emblazoned with the words “Vacation Fund.” That should cover all your bases, right? Well, maybe not.

If you’re serious about making the most of your money, it’s time to explore everything your credit union has to offer, starting with money market accounts. But before you make your way to your local branch, you’ll need to understand how money market accounts work and, more importantly, if opening one is the right choice for you. Keep reading for answers to all your money market questions.

What Is a Money Market Account?

Put simply, a money market account is a type of savings account that may earn a higher interest rate than a basic savings account. And although these accounts may provide an opportunity to make some extra cash, there are a few more things you need to know.

First, money market accounts typically require a higher opening balance, ranging from $500-$1,000. These accounts may also call for a higher daily balance to avoid monthly fees. At iTHINK Financial, our Money Market Max account calls for a low $500 minimum daily balance to waive these fees.

Behind the scenes, money markets also function differently from basic savings accounts. When you deposit money into a savings account, we can use those funds to grant loans. The advantage of a money market account is that your funds are insured up to $250,000, so there is no risk involved with your deposit, but you can still earn a higher return on your deposits.

Money market accounts also offer a level of liquidity not found in other types of investment accounts. You’ll be able to access your money when and where you need it using a debit card or a check. That being said, money markets are not the same as interest-bearing checking accounts—you’re limited to a certain number of transactions each month.

Money Market Account vs. Savings Account vs. Certificate of Deposit (CD)

Choosing the best way to grow your savings is wholly dependent on your goals and needs. Are you saving for the long term, like a down payment on a house, or an immediate goal, like a trip? Do you need access to your money at a moment’s notice? Or can you leave those funds untouched for a long period of time? Only you have those answers, but you may need a little guidance getting to them.

To get a better understanding of what your options are when it comes to putting money aside, here’s a chart for quick comparisons between money markets, savings accounts, and certificates of deposit:

Savings Comparison Chart


Savings Account

Money Market

Certificate of Deposit

Minimum Deposit

$5, depending on account



Interest Rates


0.30%-0.80%, tiered based on balance

0.80%-2.25%, based on certificate terms

Monthly Transactions




Early Withdrawal Penalty




ATM Access




Reasons to Open a Money Market Account

Just like any other financial decision, a number of considerations exist to make before taking any action. You’ll need to evaluate your finances and figure out where you are today and where you want to be tomorrow. How can a financial product help you get there? Are you in a position where you can assume a certain amount of risk to earn a bigger reward? Or do you want your money in a safe space and growing at a slow but steady pace?

To help you along the decision-making process, we’ve found opening a money market account might be a good option for you if:

  • Your bank or credit union offers a high-interest rate on money market accounts.
  • You have a sizeable amount of cash to deposit and earn interest on.
  • You want a higher earning potential than a basic savings account but want easy access to your funds in a pinch.
  • You want the option to make up to six withdrawals each month via checks or debit card while still earning interest.

Exploring your financial options can be overwhelming, but you don’t have to do it alone. A financial advisor can help you determine what the best next step is for you to take on your personal finance journey.  

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