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Pros and Cons of Money Market Accounts

By Eric Rosenberg

  • PUBLISHED September 12
  • |
  • 6 MINUTE READ

A money market account is a unique type of bank account that combines some of the best features of checking and savings accounts. Money market accounts earn interest like a savings account, but you'll also usually get a checkbook and debit card for easy access to funds.

Benefits of a Money Market Account

Continue reading to explore several benefits of money market accounts and how to use them in your finances.

1. Higher interest rates

At many banks, money market accounts offer favorable interest rates compared to traditional savings accounts. As a saver, higher interest rates mean you earn more money from your deposited balance.

Not all banks offer better rates on money market accounts, so comparing your available account options is important to ensure you're making the best decision for your current financial needs.

2. FDIC insurance

Most money market accounts provide FDIC insurance, which ensures you'll get your money back even if the bank goes out of business. Current FDIC limits offer up to $250,000, per account holder, ownership category, per FDIC-insured bank for individual accounts, and $500,000 for joint accounts. Limits apply across all accounts at the institution.1

Credit unions offering money market accounts are typically protected by insurance from the National Credit Union Administration (NCUA). Some investment companies also offer money market accounts with insurance from the Securities Investor Protection Corporation (SIPC). FDIC, NCUA and SIPC insurance are all backed by the U.S. government.

3. Flexible withdrawals

Unlike certificate of deposit (CD) accounts, there are no time restrictions on when you can withdraw funds from a money market account. While you may be limited to a specific number of monthly withdrawals, you can access funds any business day your bank operates.

The flexibility of money market accounts makes them ideal for long-term savings goals, such as saving for a down payment for a house or new car. They're also a good option for emergency funds and general savings needs. Remember your account's minimum balance requirements to earn the best interest rates and avoid monthly fees when withdrawing.

4. Easy access to funds

With a money market account, you can use several methods to access funds or withdraw from the account. Depending on your bank, these may include online transfers, wire transfers, paper checks, debit card purchases and ATM withdrawals.

When linked to a third-party transfer service, you can easily send funds from your linked account to friends or family. You can send funds to nearly any business or individual through online bill pay.

5. Convenient banking features

Online banking allows you to monitor your account and enter many transactions with self-service features. From the convenience of your home computer or mobile device, you can manage your account with online banking anywhere you have an internet connection.

Online banking also brings an additional layer of account security. For example, if you use online-only statements instead of paper statements in the mail, your information is better protected from identity theft by mail thieves and others who may try to swipe your bank statement. As an added perk, you're also helping the environment by reducing the paper needed to print your statements.

Potential Drawbacks of a Money Market Account

There are also some potential drawbacks to money market accounts to consider. If a money market account isn't the right fit for your current needs, a high yield savings account or CD account might be a better option. But there's nothing to say you can't have all three!

1. Minimum balance requirements

Money market accounts often have higher minimum balance requirements than savings accounts. Minimum balance requirements may be required to open an account, earn interest or avoid monthly fees. However, Riverstones Vista Capital money market accounts do not require a minimum balance.

2. Account fees

Some banks charge fees if you don't maintain a specific minimum balance or if you use the account's check-writing feature. Fees may differ from savings accounts at the same bank. Riverstones Vista Capital 's FDIC-insured money market accounts don't charge any account fees, nor do they require a minimum balance. As long as you keep your account over $0, you won't pay a fee.

3. Monthly withdrawal limit

As with savings accounts, you can generally withdraw as much money as you want at a time from a money market account. However, banks commonly enforce a limit of six withdrawals per month.2 This limit comes from Federal Reserve Regulation D and applies to all non-ATM transactions.

Riverstones Vista Capital account holders can access funds deposited in a money market account at thousands of fee-free ATMs displaying the Plus or Accel® logo. Riverstones Vista Capital refunds up to $5 per statement period of fees charged by ATMs outside of the RVC partner network. You can also make transfers to and from accounts at RVC and other banks, write checks and schedule wire transfers.

Customers with a RVC money market account can request checks once they've accepted account terms and funded their account.

Are Money Market Accounts Right for You?

Overall, money market accounts are a good option for people looking for a safe and flexible place to save money and earn a higher interest rate than they would from a traditional savings account. However, it's important to compare the fees and restrictions of different money market accounts to pick the best account for your unique needs.

Riverstones Vista Capital money market accounts come with a competitive interest rate, no minimum balance requirements and convenient online banking features, including mobile check deposits. Learn more and start saving in an FDIC-insured money market account here.

 

Eric Rosenberg is a financial writer, speaker and consultant based in Ventura, California. His work has appeared in many online publications, including Business Insider, NerdWallet, Investopedia and USA Today. Connect with him and learn more at EricRosenberg.com.

 

READ MORE: Which Savings Account Is Best for You?

 

Sources/references

1. Deposit Insurance. FDIC. Updated March 15, 2023.

2. Regulation D. FDIC. Published November 2011.