If you’re looking for a low-risk investment opportunity, this list of the best money market accounts is a great starting point.
These types of accounts deliver better returns than savings accounts, but they aren’t as risky as other investment options.
As interest rates for traditional savings accounts continue to drop, MMAs are becoming more popular. Top money market accounts offer interest rates of 1 percent APY or higher no matter how much you deposit, which makes these types of investment vehicles accessible and lucrative.
What Is A Money Market Account?
Many banks and credit unions offer MMAs. Unlike traditional savings accounts, banks can use funds deposited in MMAs to invest in larger low-risk vehicles like bonds and certificates of deposit (CDs). While most savings accounts don’t require minimum initial investments, you’ll often need to put $1,000 or more into an MMA to get started.
Some institutions may require as much as $10,000 as a first investment, and federal law usually limits you to six withdrawals from your MMA per month.
As you consider your investment options, keep in mind that CDs are a lot like MMAs.
However, you are unable to withdraw early from a CD without facing heavy penalties; the best money market accounts are happy mediums between traditional savings accounts and CDs for consumers who want slightly higher interest rates.
Money Market Accounts vs. Money Market Funds?
While they have similar names, money market accounts and money market funds are quite different. You can open an MMA from practically any bank, but MMFs are only available from serious investment institutions.
While MMAs are insured by the Federal Deposit Insurance Corporation (FDIC), MMFs do not benefit from this type of protection.
In addition, the amount of interest that an MMF earns fluctuates over time.
MMFs can be risky investment vehicles. During the 2008 financial crisis, dozens of money market funds nearly “broke the buck” as investors rushed to take their money back. In the end, regulators intervened and protected the at-risk investments, but MMFs are still considered to be riskier than MMAs.
How To Pick the Best Money Market Accounts
Since the main reason you want to open an MMA is to get a higher rate, it only makes sense to choose one of the best money market accounts when it comes to interest rates. The majority of MMAs have similar reputations among consumers, so taking consumer ratings into account doesn’t give you a clear picture of which money market account is the best.
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Keep in mind that you don’t have to look online to find an MMA that you’ll love. Your local banks might be able to offer you money market accounts that rival some of the top contenders on the national scene. However, MMAs from local banks usually have lower interest rates. The following factors are important to consider as you select the MMA that’s right for your needs:
The best money market accounts charge low maintenance fees. Banks and other financial institutions charge these fees on a quarterly or yearly basis just to have an account open. If you try hard enough, you might be able to find an MMA that doesn’t charge any maintenance fees at all.
You want an MMA that offers the highest interest rates possible. Shop around; if the first few banks you work with don’t want to give you the interest rates you’re looking for, keep hunting until you find an institution that will work for you.
Depending on your financial situation, it might not matter how much money you have to put into your MMA to get the ball rolling. If you don’t want to put a lot of funds in one place, however, you should look for a money market account with a low minimum investment.
Most MMAs charge a variety of other fees. There’s no way to get around these fees, but you can at least make sure that they’re reasonable. If an MMA wants to charge a lot every time you make a wire transfer or accidentally overdraft, you should try a competitor.
Some banks will give you special perks when you open an MMA. Added features like online bill paying, unlimited withdrawals, and 24-hour customer service make banking better.
What Are The Best Money Market Accounts?
As we put together our list of the best money market accounts, we used all the criteria that we pointed out earlier. The following seven financial institutions offer great interest rates and low maintenance fees. They also don’t make you jump through too many hoops during the investing process.
Sallie Mae is mainly a student loan institution, but this bank also offers an impressive MMA option. At 1.5 percent, this bank offers one of the highest interest rates of the banks we looked at. Even better, the Sallie Mae Money Market Account doesn’t have a minimum investment, which makes it one of the best money market accounts on the market today.
This MMA also comes with a mobile check-writing feature, and you can write checks with your Sallie Mae account. However, if you want to withdraw money from your Sallie Mae account while you’re on the go, you’re out of luck: This institution doesn’t offer ATM withdrawals
The best thing about the Ally Bank Money Market Account is that it doesn’t come with any maintenance fees. With an interest rate of 1 percent, it offers slightly less than Sallie Mae’s MMA, but 1 percent is still pretty high in the industry.
You can withdraw your money from an ATM at any time when you have an Ally Bank MMA, which makes it one of the best money market accounts if you do a lot of traveling. However, you can only make other kinds of withdrawals from your Ally account six times per month.
What really sets Ally apart from the competition is its commitment to transparency. When you talk to Ally Bank about opening an account, you’ll get a product guide that covers everything you could ever want to know about your MMA. You can also deposit checks online and write checks with your Ally Bank Money Market Account.
Everbank with TIAA is a great choice for a lot of reasons. When you bank with EverBank, you never have to worry about being short when it comes to interest rates. This financial institution promises to always keep its interest rates within the top 5 percent of MMA interest rates around the country.
New EverBank Yield Pledge customers get a special rate of 1.41 percent for a year, and after this promotional period ends, the rate drops down to 1.01 percent. While it’s true that other banks offer better interest rates, EverBank does provide special perks like mobile check deposits, check writing capabilities, and zero fees on your account as long as you maintain a positive balance.
The downside of EverBank is this MMA’s initial investment requirements. To take advantage of EverBank’s money management account offerings, you’ll need to put down an initial investment of $5,000.
Since other MMAs offer better interest rates with no initial investments, the only reason why you’d want to work with EverBank is for this institution’s interest rate guarantee.
4. ableBanking Money Market Savings
If you’re looking for the highest interest rates possible and you don’t care about the downsides, ableBanking’s MMA might be one of the best money market accounts for you. This investment option offers an interest rate of 1.7 percent, which is much higher than the rates that most competitors offer.
However, ableBanking makes up for this generous interest rate by taking away pretty much everything else that you might find useful. For instance, you can’t write checks with your ableBanking account, and this bank also charges high fees. If you accidentally overdraft, for instance, you’ll have to pay a $30 fee, which is much higher than normal.
By reducing overhead and streamlining the investment process, ableBanking sets itself apart from competitors that have to reduce their interest rates to make ends meet. Only work with ableBanking if you’re prepared for the inevitable headaches associated with this bank.
When you choose Bank of Internet USA, you get an interest rate of 1.05 percent as long as you have $100 to invest. You don’t have to maintain a minimum balance to work with this financial institution, and there are no monthly fees.
However, this bank charges other fees for pretty much anything. If you want to wire funds to another account, for example, Bank of Internet USA will charge you $30. They also charge hefty overdraft fees. Bank of Internet USA sweetens the pot with check writing and mobile deposit features. Impressively, this bank offers a built-in bill-paying feature that can be very convenient.
Synchrony Bank is known for offering specialty credit cards through retailers. However, this institution also has a little-known MMA. While Synchrony’s MMA isn’t the best money market account, but it’s comparable to its main competitors. It offers 1.05 percent interest, and you can withdraw funds from your Synchrony Bank MMA from anywhere in the country.
You can withdraw funds from your Discover MMA for free. Withdrawing is easy, as you can use more than 50,000 locations in the USA. This bank also offers a 1.95 percent interest, debit cards, and a bill-paying service. If you invest more than $100,000, however, your interest rates drop significantly.