Ready to earn some money on your money but aren’t sure where to start? A Money Market account could be an excellent option for you!

What is a Money Market account? Like a traditional savings account, a Money Market savings account allows the flexibility to deposit and withdraw funds whenever you’d like. It even includes access to funds using a debit card or checks.

And, unlike a traditional savings account, Money Markets come with a built-in higher interest rate.

“A Money Market does require a higher minimum balance than a regular savings account would, but in turn, you’re earning a higher interest rate on it,” said Nicole Bryan, Vice President and Senior Product Manager with First Merchants Bank.

Despite the name, a Money Market account isn’t connected to the stock market – or any market.

“I think sometimes when people hear Money Market they think you’re in the market, so you have the opportunity to lose your principal balance,” Nicole explained. “But that’s not true. It’s FDIC insured and it’s really a very safe account for customers. You’re not going to get those peaks and valleys think of when they hear the word ‘Market.’ They’re very stable accounts.”

What’s the difference between a Money Market and High Yield Savings Account?

While a Money Market account does have higher interest than your tried-and-true savings account – and is thus considered a high-interest product – it isn’t always as high as the flashy and popular high-yield savings account offered by many online banks.

But that doesn’t mean it’s not a useful tool to have in your savings bucket.

“Money Markets tend to be very stable choices for saving,” Nicole shared. “The interest rate on standard Money Market accounts doesn’t fluctuate much – so they’re dependable accounts. You know you’ll get a higher rate over a longer period of time.”

However, there are some situations where a Money Market is a better choice and others where you may want to consider a different option.

When to Choose a Money Market

When should you get a Money Market? According to Nicole, the first criterion for considering a Money Market account is having enough money to meet the minimum balance.

“For example, First Merchants’ is $10,000 – and that’s pretty normal,” said Nicole. “So, you want to make sure you have that required amount and that you’ll be able to maintain that balance on an ongoing basis.”

Nicole said she often recommends Money Markets to clients who have come into some money – either through an inheritance, a payout, selling a business, or other means – but haven’t decided what they want to do with it yet.

“If you put that money in a Certificate of Deposit (CD), it gets tied up for the term, and you can’t access it,” she explained. “But that isn’t a problem with Money Markets. So clients can take their time and think deeply about what they’d like to do with that money – whether that is a CD, or investing, putting it towards a large purchase, or putting it towards retirement.”

That flexibility also makes it a great place to store your emergency savings fund – in addition to being accessible when you need it, it will also grow thanks to that higher interest rate.

When Not to Get a Money Market

Nicole said there are a few situations where you may want to choose a different savings option.

“For example, I wouldn’t encourage a client to get a Money Market as part of a long-term savings strategy or as part of their retirement savings,” she said. “There are often better ways to meet those goals, and that’s not playing to a Money Market’s strength. It’s more for saving for a large purpose or your emergency fund.”

You may also want to look elsewhere if you can’t maintain the minimum account balance. While going below that minimum only means you’ll have to pay a monthly account maintenance fee, Nicole encourages her clients to meet the requirements for fee-free accounts if at all possible.

Additional Resources

If you’re interested in a Money Market account, see if you qualify for one of our Money Market specials – it’s a chance to get a higher rate and earn more on your savings!

You can also talk to your attentive local banker about our Money Market accounts and what options might be available to you as you build a savings plan.