Disclaimer: This article is for general educational purposes only and is not intended to imply that Citi offers the product or product features discussed herein. Citi may have different product offerings and/or eligibility criteria than those mentioned in this article.
Key insights:
- A money market account is a type of savings account that lets you hold your funds while earning interest
- These accounts often provide convenient access to your cash through checks or debit cards, and can be linked to your checking account to provide overdraft protection
- Understanding the pros and cons of money market accounts can help you decide if this product fits your financial goals
A money market account (MMA) is essentially a savings account. It’s a deposit account that allows you to store and earn interest on your money. Combined with other common account features, MMAs could be valuable tools for managing your finances. That said, it’s important to know the pros and cons of an MMA before opening one.
Let’s explore the benefits of a money market account, along with potential drawbacks, to determine if it’s the right option for you.
Advantages of a money market account
MMAs could help you make headway on both short- and long-term financial goals. Here are a few benefits, many of which apply to traditional savings accounts as well.
Earn interest on your money
MMAs earn interest like traditional savings accounts do. The longer you leave your money in the account, the more interest you stand to earn. This could help you progress toward your savings goals faster, such as making a large purchase or building an emergency fund.
FDIC-insured
If you open an MMA with an FDIC-insured bank, your money would generally be insured by the FDIC up to $250,000 per depositor, per ownership category. Having your money insured can provide peace of mind in case of bank failure.
Convenient access to your cash
Although some banks may limit certain monthly withdrawal transactions, you’d still generally be able to access your MMA funds when you need them. Some MMAs offer checks or debit cards to make the withdrawal process even more convenient.
Overdraft protection
Overdraft protection is a service that helps prevent transactions from being declined due to insufficient funds. If you link your MMA to your checking account, your bank automatically transfers funds to cover transactions that exceed your checking balance. This feature may also help manage occasional timing gaps between bill payments and deposits.
Drawbacks of money market accounts
MMAs can be useful tools to save funds, but, like any tool, they can also have drawbacks. Here are a few things to consider when weighing your options.
Variable interest rates
Most MMAs have variable interest rates. This means the interest rate could dip in the future based on market conditions.
Minimum balance requirements
Some MMAs may require a minimum balance to open an account, earn the advertised APY and avoid fees. You might need to maintain a higher balance compared to a traditional savings account.
Withdrawal limits
Withdrawal transactions may be limited depending on the bank. This could be challenging if you want to keep your funds highly accessible for frequent transactions.
Maximize your savings with Citi
While Citi doesn’t offer consumer MMAs, you can open a Citi Savings account to help grow your savings. You’ll gain access to digital banking tools, fee-free ATMs1 and account features designed to support your financial journey.
Explore the rates of Citi® Savings accounts today to find the right one for your needs.
Money market account benefits FAQs
How much will $10,000 make in a money market account?
The amount of money you earn depends on the annual percentage yield (APY) offered by your bank. Because MMA interest rates are variable, your returns could fluctuate over time based on market conditions.
How long should you keep money in a money market account?
You could keep your money in an MMA for as long as you like. Many people use them for short-term goals or emergency funds because the funds remain accessible while earning interest.
Is it better to put money in a CD or a money market account?
A certificate of deposit (CD) typically offers a fixed interest rate but requires you to lock your money away for a specific term. A money market account offers variable rates but provides access to your funds. Both options help grow your funds.
1Claim is based on locations in the United States where customers can make cash withdrawals with no surcharge (usage) fee by the ATM operator. Citibank customers can get cash, get information and make transfers between their eligible linked Citibank accounts with no surcharge fee when they use their Citibank® Banking Card at ATMs in the U.S. located at Citibank branches, ATMs at select retail store locations, and ATMs participating in the MoneyPass® Network; regular account charges apply. ATMs in retail stores and at other non-Citi locations are not owned or operated by Citibank and offer fewer functions. Use the Citi Worldwide ATM/Branch Locator on Citi® Online or the Citi Mobile® App to find the nearest ATMs and branches, including non-Citibank ATMs in the U.S. with surcharge free access. MoneyPass is a registered trademark of Fiserv, Inc.
Disclosure: This article is for general educational purposes. It is not intended to provide financial advice. It also is not intended to completely describe any Citi product or service. You should refer to the terms and conditions financial institutions provide for various products.
