Dumb with Money

Money market accounts usually yield higher interest rates than basic savings accounts. In return for the higher interest rate, you get make less transactions with your account and are required to maintain a higher balance. In Engligh you have less access to your account, but the bank pays you a little more.

Pros:

1. If you are using traditional banks you will definitely get a better rate than a standard savings account.
2. In many cases, you can write a few checks a month with your money market; a feature that does not come with a savings account.

Cons:

1. In most cases you can make a maximum of six withdrawls a month, beyond that there are penalties.
2. Many online savings accounts outperform money markets; which gives you more access to your money.
3. You must maintain a relatively high minimum balance.

My Take:

If you are into traditional banking and you have a decent amount of liquid on hand, money markets aren’t a bad deal. Especially since you can write a few checks, in case you are making a large purchase.

If you are comfortable with online savings accounts, I would say to stay clear of any traditional money markets. You’ll also find a lot of great online savings accounts that have killer rates over money markets. You’ll also find a few great online money markets that edge out many online savings accounts. GMAC is my favorite online money market account right now.