Should You Open a Money Market Account in 2024?

You may have never thought about opening a money market account before -- no shame! In case you don't know, these accounts are sort of like a hybrid of savings and checking accounts. You can earn interest on the money you keep in the account, plus you can often access it via checks or a debit card.

Money market accounts sometimes come with a higher minimum deposit requirement to open than savings accounts (but not always), so they're likely a better fit for you if you already have a chunk of money saved. They make a pretty good home for your emergency fund because of that easy access -- if you've got a roof leak or need new tires for your car in a hurry, you don't have to transfer money to a checking account to be able to pay your roofer or your auto mechanic.

As we inch closer to the end of 2023, opening a new bank account could be on your radar. And if it is, here's why money market accounts are worth considering.

Rates are still high

Thanks to the actions of the Federal Reserve since 2022, we are currently saddled with an especially high federal funds rate (which is intended to fight inflation). This is the rate banks charge each other to send money back and forth, and while it isn't directly the same as the rates consumers end up being charged to borrow money, it has a major impact. Consequently, APRs (annual percentage rates) are up on personal loans, credit cards, and other means of borrowing.

The silver lining here is that APYs (annual percentage yields) are also up. This means keeping money in the bank is more lucrative than usual -- I earned over $1,000 on the money in my savings account in 2023, purely thanks to a higher APY. The rates on the best money market accounts are over 5% right now, so don't miss out. These rates won't last forever (the Federal Reserve will eventually reduce rates).

Money market accounts have neat features

Aside from getting to earn a generous return on your cash, money market accounts have other appealing perks you might want to take advantage of in the new year. For starters, like other deposit accounts, money market accounts fall under the umbrella of FDIC insurance. This is assuming you open one with an FDIC-insured bank (it's easy to check whether your bank is; look it up on the FDIC's BankFind Suite). If your bank goes under, up to $250,000 of your money will be returned to you ($500,000 if it's a joint account).

That easy access to cash I mentioned above is another reason to open a money market account. Savings accounts are paying similarly high APYs right now, but most of them don't come with an ATM or debit card, and definitely not paper checks. But a money market account might come with these options to access your money. What's not to like? This ease of access is why money market accounts are a great place to keep your emergency fund, too.

New year, new bank account?

The start of a new year is a great time to sit down with your finances and make sure you're getting all that you want out of the bank accounts you use. If you've never thought about a money market account before, 2024 could be a great year to open one.