How to pick the best Money Market Account
If you are looking to invest your money or create an emergency portfolio beyond the traditional bank savings account, then you might want to consider opening a Money Market Account (MMA). Money Market Account, which should not be confused with Money Market Funds, by the way, is a type of savings account that actually offers better interest rates as compared to most traditional personal savings account. They are also more liquid than certificates of deposits (CDs).
Most banks require a relatively more significant minimum balance and opening deposits. Some banks will also charge slightly higher monthly fees on MMA than they do on a personal savings account. The best part is that the accounts also attract bigger APYs. There are also a couple of banks which will offer you even higher rates if you open a checking account in the same bank.
It’s also possible to switch from a personal savings account to a money market account within the same bank. All you have to do is make sure that the balance in your standard savings account has reached the minimum requirement of the money market account. Most banks have made this process pretty easy, and you’ll also get to enjoy a linked checking account.
By linking your checking account with your MMA, you’ll not only enjoy effortless transfer options between different accounts in the same bank (at no charges in some cases), but you might also be eligible for a waiver to some of the account maintenance fees. The best part yet is that some banks will increase the APY in your Money Market Account when you open and link a checking account to your MMA. This is popularly referred to as “rate bumps” or “relationship rates.”
The Best Money Market Accounts
Different banks have different APY on MMA accounts. Also, they have varying requirements when it comes to both the minimum opening deposit and account balance. We have compiled a report on some of the best MMAs in the market at the moment.
We should also tell you that we arrived at these accounts after considering various factors including:
- APY – of course, you want the highest APY possible, but it shouldn’t come with some strings attached. You will find that online banks offer the best APY in MMA in today’s market.
- Minimum deposit – in the traditional banking industry, minimum deposits had been one of the most significant barriers to accessing MMA. Today’s banking industry is highly competitive, and this has forced most banks to be more flexible with the minimum deposit requirement. Again, our research discovered that online banks asked for a lower minimum deposit than major banks and hence more people can open MMA.
- Maintenance fee – It would be best if you can avoid maintenance fees completely. You can also take advantage of some banks which waive the maintenance fee if you keep the balance above a described level. These are much better as compared to the banks that will charge you a maintenance fee regardless of the balance in your account.
- Other fees – you need to go through all additional fees charged to money market accounts. For instance, the maximum withdrawal limit of MMA is six times per month. A specific fee will be charged if you withdraw more than six times in a particular month. Make sure that you are aware of such and other fees. The last thing you’d want is a shockingly high fee of something you had no idea of.
- Additional benefits – other than the high APY, you need to look at the additional benefits that each account has to offer. This is where most banks compete in an attempt to entice customers.
With that in mind, here are the best Money Market Accounts available today:
There are so many reasons to love CIT Bank MMA. This online bank will earn you 1.85% on all balances in your account. Yes, all balances. There are no minimum balances required here. This is perhaps, the highest rate of any Money Market Account in the market today.
The bank has made the account even easier to open by setting the minimum deposit at just $100. There are also no monthly fees that will be charged on your account. However, there is an excess transaction fee of $10 (per transaction) that is charged when you make more than six withdrawals or transactions in a month. The maximum excess transaction fee per month is $50.
Other than the high APY, owners of this account will also enjoy other benefits such as the People Pay program that offers convenient person-to-person payments from your CIT bank to any other U.S bank account and cell phone number or email address.
CIT Bank also provides other accounts such as Jumbo CDs and Term CDs that offer competitive rates but for a longer term. These may become useful in case you decide to tie your money up in the future. They also offer home loans, equipment financing, business loans, and custodial accounts.
Everbank’s approach to money market accounts is fascinating. This bank pledges to keep their rates within the top 5% money market accounts at any given time. For the introductory one year, the bank will provide you with a staggering 2.15% rate! That’s really high but remember that after the one year, the rates will be readjusted to match with the market fluctuations. You shouldn’t have anything to worry about if EverBank keep their pledge.
On the downside, you need a minimum deposit of $5,000 to open an MMA with EverBank. Also, the bank accepts balances of up to $250,000.
EverBank does not charge any maintenance fees. There is, however, a $10 in excess transaction fee that will be charged on each transaction done after the allowed six transactions per month.
EverBank also have other products that include impressive CDs and checking.
Ally bank is yet another online bank that offers decent Money Market Accounts. The bank was actually recognized by the Pew Report for its commendable banking practice with low overdraft fees, non-binding dispute resolution policies, and clear disclosures. An MMA with this bank will earn you 0.90% on any balance. They also allow you to increase your earning to 1.00% if you can maintain a balance of at least $25,000. There is also no monthly fee charged here.
Ally Bank also allows you to link your Ally checking account with your MMA thus providing overdraft protection while also making automatic transfers much easier to conduct.
Unlike most other online banks, Ally offers its customers a 24/7 support line where you can reach one of the bank’s representatives in case of any issues at any time.
Capital One offers the best Money Market Account at the major banks level. The APY here is an insane 2.00% if you keep the account balance above $10,000. Meanwhile, all balances below $10,000 will earn you 0.85% which is still pretty high and much better than what other banks in the market have to offer.
There is also no monthly fee charged, and this increases the value of the MMA account even further.
The downside with Capital One is that you cannot write checks here unlike other online banks such as the ones discussed above. Also, if you have less than $10,000 the Capital One 360 saving may be a more exciting alternative as compared to the Capital One MMA.
Money Market Accounts are a good option if you want to earn high rates on your savings while also retaining regular access to the funds. This means that the accounts are a better option than CDs where your money is essentially tied up for a given term.
But how are MMAs better than Savings account? That may be a long debate, but the one thing that most people love MMA for is the option of check writing that you cannot find in Savings accounts.
Conclusively, if you have evaluated your position and determined that an MMA is the best way to go, the above four banks come highly recommended because they offer the best MMA in the market at the moment.
David is a financial expert who graduated from the University of Fordham (Master in Finance) in 2001. He has 10+ years of experience in private equity and wealth management. With strong expertise in senior-level financial planning, personal financial analysis, and mortgages, David knows his way around personal finance. Before working at CCR he used to be a financial analyst at McKinsey.
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