3-D $100 bill financial graph with arrow showing interest growth

3-D $100 bill financial graph with arrow showing interest growth

Is a money market account right for you?

Simple answers to 5 key questions

Nearly 40% of Americans have resolved to save more money in 2023 – that’s the same percentage as those who follow a special diet, such as Keto.^{1, 2} We wondered: How many of these people have decided where they are going to save that dough?

The 26-week savings challenge is a popular New Year’s exercise for slowly building a starter savings account. But for those who are fortunate enough to set aside a chunk of money right away, it makes more sense to put it to work for you, by earning interest.

One popular option is a money market account. Many Americans now put money into these safe, easy-to-access savings products, contributing to nearly $4.8 trillion in cash as of mid-January.³

Still, it is apparent that a lot of people, especially new savers, aren’t quite clear on what a money market account, or MMA, has to offer. So we’re answering five big-money questions about MMAs, based on what our clients ask us.

Question 1: I’m a little embarrassed, but I’m unsure. What is a money market account?

Money market accounts are among the three most common savings instruments for a reason.

A lot of people don’t learn about MMAs until they are in a position to save. Fortunately, MMAs are super-easy to understand, because they work a lot like a savings account. You simply deposit money into the account and it earns interest. That being said, there are a few key differences. Chief among them: MMAs earn higher interest rates than a typical savings account does. And the more money in the account, usually the better the rate. In return for these improved earnings, MMAs require higher minimum balances than typical savings accounts and can limit the terms of withdrawals.^{4, 5}

Question 2: Are money market accounts safe?

Yes. Just like regular savings accounts, most MMAs are protected by the Federal Deposit Insurance Corp. for up to $250,000. Also, many MMA accounts are eligible for overdraft protection. And because their growth is based on interest, you can maximize your savings potential.^{6, 7}

Question 3: In what ways are money market accounts useful?

MMAs make sense for savers who want an easy-to-tap rainy day fund. They’re also useful for planning and budgeting future spending because the account sum remains reliably predictable – it just modestly increases. Further, unlike a typical savings account, some MMAs issue checks and debit cards, so the owner can easily withdraw and/or transfer money from anywhere. You might not be able to empty the account all at once, however: Financial institutions have different limitations on how many withdrawals can be made from a money market account in a statement period.^{8, 9}

Question 4: When does it make sense to save in a money market account?

If you have money saved that you want to keep accessible and safe from stock-like fluctuations, then it makes sense to consider a money market account. Many people open MMAs to save for down-the-road events such as weddings, dream vacations, or down payments on a home. Some build them up each year to cover property taxes. And there’s always the good old-fashioned emergency fund. If the basement floods or the furnace conks out, fast access to cash is crucial. This is an important distinguishing feature between MMAs and certificates of deposit, another stable savings choice – many CDs have multi-year term limits and charge a penalty if there is an early withdrawal.^{10, 11}

Question 5: Is there just one kind of money market account, or do I have options?

Good news: Because people have different savings goals at varying stages in life, there are different money market accounts. At First Financial, we offer two:

The f1RST Money Market account – This option, ideal for mid-level savers, earns interest at a rate that beats the average savings account and is eligible for overdraft protection. There is a small monthly maintenance fee that is waived on accounts of $10,000 or more.
The Premier Money Market account – First Financial clients who hold a Premier Checking account with us can save in this higher-perk option at no cost. Among the benefits: free cashier checks, money orders, and domestic wires. Our Premier MMA also earns the best interest rates amongst our standard MMAs, includes overdraft protection, and puts no limits on withdrawals.

Still more questions? We're here to help.

Money market accounts are among the three most common savings instruments for a reason. Financial advisors generally recommend that people save 15% to 20% of their earnings in accounts that offer protected growth. Money market accounts, as well as traditional savings and CDs, do that.^{12, 13}

Each option has its own set of advantages to meet the resolutions of individual savers. Our bankers are here to talk through them all. One thing is pretty much guaranteed of an MMA, though: your dough will rise.

We know your nest egg is precious. If you’re interested in learning how to make the most of it through a money market account, we offer an easy-to-follow benefits chart of our options here.

Financial Planning

1 “America’s Top New Year’s Resolutions for 2023,” Statista, Dec. 23, 2022; https://www.statista.com/chart/29019/most-common-new-years-resolutions-us/

2 “Keto Diet Statistics in 2023,” By Alex Reed, BodyKetosis, Jan. 1, 2023; https://bodyketosis.com/keto-diet-statistics/

3 “Money Market Fund Assets,” Investment Company Institute, Jan. 12, 2023; https://www.ici.org/research/stats/mmf

4 “Today’s Best Money Market Rates and Accounts,” By Shawn Plummer, The Annuity Expert, Jan. 11. 2023; https://www.annuityexpertadvice.com/rates/money-market-account-rates/

5 “Money Markets: What They Are, How They Work, and Who Uses Them,” By Adam Hayes, Investopedia, Aug. 29, 2021; https://www.investopedia.com/terms/m/moneymarket.asp

6 “4 Reasons to Save in a Money Market Fund,” By Judith Ward, T. Rowe Price, Dec. 2, 2022; https://www.troweprice.com/personal-investing/resources/insights/4-reasons-to-save-in-a-money-market-fund.html

7 “Money Markets: What They Are, How They Work, and Who Uses Them,” By Adam Hayes, Investopedia, Aug. 29, 2021; https://www.investopedia.com/terms/m/moneymarket.asp

8 “What Is Regulation D In Banking? And What’s Changed for Your Savings Account?” By Cassidy Horton, Forbes, Oct. 18, 2022; https://www.forbes.com/advisor/banking/savings/regulation-d/

9 “Money Markets: What They Are, How They Work, and Who Uses Them,” By Adam Hayes, Investopedia, Aug. 29, 2021; https://www.investopedia.com/terms/m/moneymarket.asp

10 “6 Types of Savings Accounts,” By Rebecca Lake and Mitch Strohm, Forbes Advisor, Jan. 4, 2023; https://www.forbes.com/advisor/banking/savings/types-of-savings-accounts/.

11 “Money Markets: What They Are, How They Work, and Who Uses Them,” By Adam Hayes, Investopedia, Aug. 29, 2021; https://www.investopedia.com/terms/m/moneymarket.asp

12 “Which Type of Savings Account Is Best for You? Here’s What You Need to Know,” By Zack Sigel, Inc.; https://www.inc.com/mediafeed/zack-sigel/the-ultimate-guide-to-different-types-of-savings-accounts.html

13 “The average amount in U.S. savings accounts – how does your cash stack up?” By René Bennett, Bankrate, Dec. 21, 2022; https://www.bankrate.com/banking/savings/savings-account-average-balance/

The information on this page is accurate as of February 2023 and is subject to change. First Financial Bank is not affiliated with any third-parties or third-party websites mentioned above. Any reference to any person, organization, activity, product, and/or service does not constitute or imply an endorsement. By clicking on a third-party link, you acknowledge you are leaving bankatfirst.com. First Financial Bank is not responsible for the content or security of any linked web page. Member FDIC / Equal Housing Lender.