(Updated 9/1) In the world of banking products, you are always trading off interest rate for flexibility. Typically the higher the interest rate, the less flexible the account. Take CD rates for example, they are often higher than savings accounts and they are less flexible. You decide how long you’re willing to keep your money locked up and then pick a bank that offers the best rate for that term. If you wish to get your money early, you pay penalty. On the other end are checking accounts. Checking accounts have the worst interest rates but offer the most flexibility. You can get your cash whenever you want it, write as many checks as you’d like, and visit your own ATM without penalty. For that flexibility, you earn very little, if any, interest.
Where does that leave money market accounts?
Money market accounts are like a hybrid between checking and savings accounts. They offer the higher interest rate of a savings account while allowing you the ability to write checks (a limited number, 3 to 6 each month) and they often have tiered interest rates, with higher APY for higher balances. You get them at your local bank and they are FDIC insured.
A money market fund and a money market account are two different things. A money market fund is a mutual fund that invest in what it believes to be safe debt like government treasury bills, savings bonds. municipal bonds, etc. Since it’s a mutual fund, it’s technically a security and you have to buy it through a broker. They are not FDIC insured (not counting the recent government intervention).
Now that you have the two all sorted out, you might be interested in knowing who has the best MMA rates, right?
Best Money Market Account Rates
As you can see, the best MMA rates are slightly lower than the best CD rates  (a head to head shows GMAC Bank’s MMA rate is 3.25% vs. a 4.25% for its 18 month CD). That’s because you get more liquidity with a money market account.
Finally, be sure to read the terms and conditions, fees and disclosures on all money market accounts because each one is slightly different. There are some federal regulations (like up to three checks per statement cycle) but double check to be sure.