One-third of Americans are not aware of the bank account with the highest APY.
More than 27% of Americans think that checking accounts offer the best returns on their savings.
As surprising as it may sound, most American adults fall short on basic financial knowledge. This unawareness prevents you from generating long-term investment returns.
Let’s take a simple example.
If you put away $25,000 for five years,
- A checking account with 0.04% interest would yield $25,050
- High yield savings account with 1.5% interest would yield $26,945
- A CD with a 1.6% interest would yield $27,080
- A money market account with a 1.4% interest would yield $26,811.
Note: We’re taking some of the highest yields offered by online banks for these calculations. You can refer to our posts on high yield savings account or the best CD rates for a better understanding.
It means any account except a checking account will grow your savings considerably.
Unlike a savings account or a CD with limited transactions or a lock-in period, a money market account offers competitive APYs, while providing liquidity, ATM support, and even check-writing options. Money market accounts function much like savings accounts except they have higher minimum deposit requirements, higher APYs than checking accounts, and provide better access to your funds.
We’re going to find out some of the best money market rates, money market accounts, benefits of money market accounts, and how they stand against other savings accounts in this post.
Let’s get started.
What are the Best Money Market Rates?
Choosing the right money market account could be tricky, especially if you’ve just started your research.
We have put together a list of some of the best money market rates in this post. Throughout this list, we’ve analyzed these financial accounts based on multiple factors to give you an apple-apple comparison.
Here are our picks for the best money market rates this year.
Best for savers looking for a high introductory rate and branch access
If you’re looking for an established bank with branch access, BBVA is an ideal candidate to look into. The bank operates over 650 branches across seven different states. You can open a money market account with BBVA by visiting its branch, calling the customer support, or through an online application.
BBVA allows you to open a money market account with a minimum deposit of $25. However, you’ll need $10,000 or more in your account to qualify for its highest APY of 0.90%. Any account balances below $10,000 earn an interest of 0.05%.
The account comes with a monthly service charge of $15, but you can have it waived by either maintaining a minimum balance of $10,000 or setting up an automatic transfer of $25 through a BBVA checking account.
BBVA has an intuitive mobile app that supports transfers, bill payments, mobile check deposits, and even real-time alerts for any unusual activities.
However, there are some concerns when it comes to the promotional introductory APY for BBVA’s money market account. The high-interest rates are applicable for the first year only and are likely to change after the promotional period.
BBVA offers ATM support with money market accounts, but you’ll have to pay $2.50 for any non-BBVA ATM transaction. Also, you’re subject to a penalty of $25 if you end up closing the account within 180 days.
Do you want to learn more about (BBVA)?
Best for savers seeking better fund access (Unlimited ATM withdrawals)
Betterment isn’t your standard bank or online bank, for that matter; it’s a robo-advisor.
For those who aren’t aware of the concept, a robo-advisor is a financial program that invests your funds using an algorithm. All you have to do is to choose your risk profile through a series of simple questions, and the robo-advisor handles the rest.
Betterment is one of the biggest names among robo-advisors, and although it doesn’t offer a money market account, Better Cash Reserve is a good option to consider. It is a high-yield savings account, which offers better flexibility than most traditional banks.
Betterment Cash Reserve account offers an APY of 0.30% on all balances and an FDIC insurance of up to $1 million. It has multiple participating banks under this product, which allows the robo-advisor to provide a higher than usual insurance cover.
There are no fees or minimum deposits associated with the Betterment Cash Reserve account. You can transfer funds through ACH transfers, automatic deposits, and its well-thought Two-Way Sweep Tool. The Two-Way Sweep Tool analyzes your transactions to understand your cash requirements. The tool, then, automatically transfers funds across your linked checking account and Cash Reserve account.
Another exciting feature of the Betterment Cash Reserve account is the ability to make unlimited withdrawals and deposits. You have to understand that all traditional banks and even their online counterparts offer up to 6 withdrawals within a statement cycle.
There are some concerns with the Cash Reserve account, with the first being no ATM support. You’ll have to rely on your checking account and online transfers for your cash requirements. Also, the APY falls short when compared with other providers on our list.
3. BMO Harris.
Best for savers seeking traditional features without sacrificing higher APY
BMO Harris, a Bank of Montreal’s US subsidiary, is a bank with a mixed heritage. The bank has a presence in over eight states, and it extends its service to the entire country through its online banking solutions.
BMO Harris is on our list for one simple reason: Platinum Money Market Account. The money market account from the bank has some of the highest APYs for a money market account, 1.75% (subject to where you reside), for account balances above $5,000.
BMO Harris doesn’t charge any maintenance fees for its Money Market Account. However, there is a tiered APY structure, with balances between $5,000 and $999,999.99 earning APY of 1.75%, and those above $1 million earning an APY of 1.50%. In case your balance falls below $5,000, your APY is adjusted to 0.01%. You’ll need a minimum deposit of $5,000 to open the account.
BMO Harris offers both ATM support as well as check-writing abilities with its Platinum Money Market account. Any ATM transactions within BMO Harris network are free, but you’ll have to cough up $3 for a non-network ATM, along with any additional ATM operator charges.
Despite its high APY, the Platinum Money Market account comes with its fair share of fees or limitations. For instance, you’ll have to pay a penalty of $50 if you close the account within 90 days. Also, the premium APY rates are not applicable to residents living in Arizona, Minnesota, Illinois, Missouri, Indiana, Kansas, and Wisconsin.
4. Capital One 360.
Best for savers seeking financial tools with a competitive APY
Capital One is one of the first names to come up when you think about online banks. The full-service bank has offered some of the best APYs across different accounts over several years. Unlike most online banks, Capital One offers most of the financial products you would expect from a traditional bank.
We’ve put it on our list because of Capital One Performance Savings account, and yes, it’s no longer called a money market account, but it offers features that aren’t readily available. The Performance Savings account earns an APY of 1.50%, not the highest, but it comes with no minimum deposit or monthly balance requirements.
Capital One differentiates itself in terms of the online saving tools and features, such as an automatic savings plan that accompanies the Performance Savings account. You can set savings goals, automate transfers for these goals, deposit checks using mobile apple, and even track your credit score through Capital One app.
In terms of concerns with Capital One 360, you do not get ATM access with this account. You’ll need a checking account with Capital One to enjoy ATM support. Also, you might be able to find better rates with other competing banks.
Here is a link to (Capital One 360) for any further queries.
5. CIT Bank.
Best for savers seeking high APY and lower deposits
A common issue savers complain about regarding money market accounts is their higher balance requirements, including minimum deposit and daily balance requirements. CIT Bank is an exception to such practices.
You can earn an APY of 1.65% on a CIT Bank money market account. You need only $100 as the minimum deposit for a new account. Also, there is no minimum balance to qualify for the highest APY. CIT Bank doesn’t charge any fees for its money market account.
CIT Bank offers all the services you need for your banking requirements, including an intuitive mobile app that supports mobile check deposits, transfers, and basic financial transactions. Your funds are FDIC insured. CIT Bank supports both Zelle and PayPal for instant transfers.
The only features we would consider missing from a CIT Bank money market account are check-writing privileges and access to ATM. However, its high APY and no minimum balance requirements make it a good option.
You can learn more about (CIT Bank) here.
6. Discover Bank.
Best for savers seeking a reliable, popular brand
Discover is often associated with credit cards, but the financial institution runs an online bank as well. If you’re looking for a bank that offers all conventional banking features without sacrificing a high APY, Discover Bank money market accounts make sense.
Let’s start with its APY first. Discover Bank offers an APY of 1.25% for accounts with balances under $100,000 and 1.30% for those with higher balances. You need $2,500 to open the account, but there are no minimum balance requirements to earn 1.25% APY. Discover Bank doesn’t charge fees for its money market account.
Unlike other online banks, Discover Bank gives you services that you’d expect from conventional brick-and-mortar banks, including a debit card for ATM withdrawals, a large ATM network (60,000+), standard and official checks, bill payments, and expedited delivery of official checks or replacement debit card.
In terms of any possible shortcomings, its tiered-interest structure may go against the bank. Also, Discover Bank has high minimum deposit requirements for opening an account.
Learn more about (Discover Bank) here.
Best for savers seeking a higher APY without limited fund access
Note: I am sorry I couldn’t put an image for this one. I can’t access the site.
Goldman Sachs is one of the most reputed names in the American financial industry, and it has done complete justice with its online-banking project, Marcus. Marcus offers some of the best APYs for CDs and high-yield savings account. We have included it on our list because of the latter.
The high-yield savings account by Marcus offers an APY of 1.55%, putting it among some of the best online banks. You don’t have to pay any maintenance charges or make a minimum deposit to open an account. Your funds will be protected by the FDIC.
Marcus offers multiple deposit options, including mailing a physical check, ACH transfers, wire transfer, and making a transfer from an external linked account.
Despite its high APY, Marcus does have some issues, such as the lack of an ATM card or limited withdrawing options. Additionally, it doesn’t support mobile check deposits, which is rare among online banks.
7. TIAA Bank.
Best for savers seeking a bank with high APYs (Top 5%)
Are you looking out for high APYs? TIAA Bank guarantees its money market account holders APYs in the top 5% of all the other banks. The bank was formerly known as EverBank, and it is offering some of the best savings products in the market.
TIAA Bank has a Yields Pledge, under which it compares its ongoing rates with competitive accounts every week and ensures that it stays within the top 5%. The bank offers an introductory APY of 1.40% for the first year for balances between $0.01 to $250,000. The APYs change after the first year, but the rates are still competitive in comparison with other providers.
You can apply for a complementary debit card and a starter bundle of checks with TIAA Bank’s money market account. The bank provides mobile check deposits and other basic financial transactions through its app.
The only shortcoming we could find is the restriction on introductory APYs for accounts exceeding $250,000, but that isn’t a real problem for most retail savers.
8. UFB Direct.
Best for savers seeking higher APY for higher account balances
UFB Direct is an online bank that beats most of its competition through high APYs. UFB Premium Money Market account comes with an APY of 1.70% for balances above $25,000. Unlike most digital banks, UFB Direct offers check-writing privileges as well as a debit card to its account holders.
You’ll need a minimum of $5,000 to open an account. UFB Direct doesn’t charge any maintenance fees for accounts with daily balances exceeding $5,000, but if your account balance is lower, you’ll be paying $10 in maintenance charges.
The catch with UFB Direct is its minimum account balance requirement for its highest APY. You earn 1.70% only if your balance is above $25,000. Anything lower than that will automatically change the APY to 0.50%.
Why Does Investing in a Money Market Account Make Sense?
Now that you have a list of some of the best money market rates, let’s find out why money market accounts make sense.
First of all, you get a higher APY in comparison to traditional savings accounts. Our research reveals that you can get APYs quite similar to that of CDs or high-yield savings accounts. Also, online banks appear to offer better APYs than their brick-and-mortar counterparts.
Secondly, you get instant access to your funds through debit cards and checks. You don’t have to lock-in funds in a CD to get a competitive APY. You can use money market accounts as the parking instrument for your emergency savings or short-term goals.
Lastly, money market accounts are safe. You’re not going to lose your funds to market movements or bank failures. You get FDIC insurance with money market accounts. We do recommend keeping an eye on any changes in the APY every now and then.
Comparison: Money Market Accounts vs. High Yield Savings
If you’re among the majority of Americans leaving your money in a checking account, let us indicate that you’re likely to lose thousands of dollars on interest income.
Money market accounts and high yield savings accounts offer higher APYs in comparison to traditional savings accounts or checking accounts. However, they aren’t exactly the same. Our analysis indicates that money market accounts overshadow high-yield accounts when it comes to interest rates. Also, a majority of the money market accounts offer ATM support and check-writing privileges.
High yield savings accounts have their advantages. Unlike money market accounts with higher minimum deposits or balance maintenance requirements, high yield savings account, in most cases, have lower minimum deposit requirements.
You must understand that both money market accounts and high-yield savings account come with the same withdrawal limits (6).
How to Choose the Best Money Market Rates?
Doing some upfront research about the best money market accounts ensures that you keep earning higher rates without unnecessary risks.
Here are some factors you should consider when choosing a money market account.
- Interest rate: Much like any other financial account, you have to make sure that the account offers competitive APYs. Although our research reveals that APYs shouldn’t be the only factor in choosing an account as long as the rates offered are above average.
- ATM or checking writing options: A money market account trumps savings account because of its ATM access and check-writing services. Having these options provide easy access to your funds.
- Minimum deposits or balance requirements: Money market accounts come with minimum deposit amounts and balance requirements. It is best to choose an account that offers the same APY for any account balance. Also, it’s better to choose an account with a reasonable minimum deposit.
- Monthly maintenance charges: It isn’t uncommon among money market accounts to charge maintenance fees. Seek an account that eliminates this fee in return for a monthly balance requirement. Be careful about other charges, including overdraft charges, transfer charges, or out-of-network ATM fees. Additionally, you should make an apple-to-apple comparison when considering the maintenance costs of different service providers.
- Transfer limits: Money market accounts may impose transfer limits on your account, including the number of daily or monthly transactions and the amount transferred. Avoid breaching this limit as you may incur penalty charges. If you intend to make frequent transactions, it’s better to go with a checking account instead.
Most banks provide FDIC coverage for your funds, but credit unions or cooperative banks can be tricky. Make sure to enquire about the applicable insurance coverage limits.
Pro Tip: Don’t limit yourself while choosing a money market account. It is always best to compare the features and interest rates offered by different financial institutions.
A money market account provides better flexibility than savings accounts. Also, you get easy access to your funds in comparison with CDs or savings accounts.
Here are our final recommendations.
- Money market accounts offer better flexibility without compromising on returns, which makes them an excellent vehicle for parking money.
- You should look at critical factors, such as deposit requirements, ATM access, or withdrawal limits when choosing a money market account.
Most of us fail to realize the importance of small financial decisions, but these small changes could make a sizeable difference in your net fortune. It’s always best to be a bit more diligent when it comes to money matters.