Best Online Money Market Accounts
Thanks to the dwindling returns savings accounts and savings bonds now offer, people have begun searching for the best money market accounts available. Money market accounts offer the safety of a savings account with higher returns.
Money market accounts are also more flexible than savings accounts, offering check writing and debit cards. In my analysis, I have included the top money market accounts.
Best Money Market Accounts: What to Consider
When I was searching for the best money market rates for you, I kept the following things in mind.
- What is the reputation of the bank or credit union? What's its grade with the Better Business Bureau?
- Does the bank charge any monthly fees on the account?
- Do you have to maintain an average daily balance?
- Does the bank offers rate tiers on its money market accounts? A rate tier is when you earn a different interest rate depending on your account balance.
- Is the advertised rate an introductory rate that will be significantly reduced after a short period of time? If so, how does that affect the overall rate of return?
- How much access do you have to your account? Does the bank offer transfer capabilities or an ATM card you can use to withdraw funds?
- How good is the bank's customer service record? Are the locations, hours, and methods of contact convenient for you?
- If the bank offering the best (or near best) money market account rate also has good deals on other financial products, it may make sense to move your other accounts. Having all of your accounts with one bank can make managing your finances much easier.
What is a Money Market Account?
The complicated money market account definition is "an account at a bank that pays a higher than normal (relative to other bank accounts) interest rate in exchange for a high minimum balance and a restriction on how many transactions may take place on the account in a given month."
In reality, a money market account isn't much different from a traditional savings account. The few differences that exist are beneficial to you as a consumer. For one, money market accounts come with a much higher rate of interest than you will find with a regular savings account with traditional banks and credit unions. In addition, money market accounts also come with check-writing abilities, providing you with another way to make your purchases.
If you need to access your funds, many providers also offer debit cards you can use with your money market accounts. And with some online companies, you will have free access to its ATMs nationwide. Therefore, if you are looking to receive a higher return to build your savings quicker, a money market account is going to be a much better option for you to consider.
The difference between a savings account and money market account is what the bank is allowed to do with your deposits. With savings accounts, banks are more restricted. Money market accounts allow the bank to invest your money in CDs, and bonds, which in turn let them pay you more interest.
Look Online for the Best Money Market Accounts
Online banks have a major advantage over physical banks: they don't have to spend money on rent, utilities, and staff for hundreds of bank locations. Instead, they can centralize all of their staffing and operations, saving money, and passing those savings onto you.
The average money market account interest rate currently sits at .08%. Online banks offer rates in excess of 1%, far above the average. This makes it easy to see that an online bank is the way to go, if you want the top money market rates.
Best Money Market Account Rates
The Best Money Market Accounts
Ally Bank Money Market Account Review
- Money market accounts with no monthly fees
- Free debit card
- You can use over 43,000 Ally ATMs nationwide for free
- Customer support available 24/7
- Rates are among the best available
- No physical locations.
- No way to deposit cash. Only checks and transfer accepted.
Since its beginnings in 1919 Ally Bank has strived to do things differently by offering an unparalleled customer service experience and excellent products to match. It currently offers checking, savings, certificates of deposit and money market accounts as well as auto loans and leases online. Ally also recently unveiled its first credit card, making it a one-stop resource for most of your financial needs.
Ally has no physical locations, offering all of its services online. This reduces overhead and makes the bank able to offer you more than the traditional bank and credit union can. To illustrate, it has customer service available to assist you 24 hours a day, seven days week. Further, since Ally doesn't have the expense of operating multiple buildings, it is able to offer bank accounts with more competitive rates of return and fewer fees, including the ability to refund your ATM fees if you withdraw funds from its nationwide network of ATMS.
My experience shows that you want the best money market account rates and service, Ally Bank is the way to go. It offers free online money market accounts, where you don't have to jump through hoops to avoid the monthly fee. Each money market account comes with a free debit card you can use for up to six purchases per month. In addition, you have access to your accounts anytime you need through Ally's mobile application where you can also deposit checks remotely.
There are many reasons why Ally Bank offers the best money market funds. For one, you will receive a higher rate of return than you would with many other financial institutions. Two, you receive a free account with Ally, where you don't have to worry about keeping a minimum balance. Lastly, with customer service available all the time help is around the corner anytime you need it, making it a great choice if you want to save money and receive exceptional service.
Discover Money Market Account Review
- Easy access to your account via check, ATM or debit card
- Rates beginning at 0.80% APY
- Customer service available 24/7
- Over 60,000 ATMs nationwide give you free access to your cash
- A simple two-step account opening process
- Need $100,000 minimum deposit to earn best rate.
- Slow transfers to other banks.
I also considered Discover because it offers a wide range of financial services from checking accounts to credit cards This makes it an alluring choice for most of your banking needs. Further, with intuitive web tools and a free mobile application, you can manage your accounts, deposit funds and even pay bills with just the press of a button.
Discover offers a quick online account setup which makes opening a money market account easy. To start, you enter your personal information on its website, then fund the account with a minimum deposit of $2,500 by check or bank transfer. From there, you just wait for your welcome kit to arrive in the mail.
One area where Discover is different from competitors like Ally is it requires a minimum balance of $2,500 to open the account. Another downside is if you want to receive the best rates with Discover you'll have to deposit at least $100,000 into your account.
Discover Bank has excellent money market accounts available, where you can receive some of the most competitive rates, superb customer service and manage your money on the go with excellent web tools. However, Discover's requirements make it a less convenient choice that Ally Bank.
Synchrony Bank Money Market Account Review
- Competitive rates relative to the top providers like Ally
- Easy access to your funds through online withdraws, checks, ATMs or phone support
- There's a $30 minimum balance to avoid fees.
- Different interest rate tiers based on account balance.
- Few physical locations.
Synchrony Bank is the next bank I analyzed. Synchrony is relatively new to the world of personal banking. Initially, it was part of GE's retail financing program, then branched off to become its own entity. It still offers retail financing, as well as checking, savings and high yield money market accounts.
The appeal of Synchrony Bank rests in its rates and service. It offers money market funds with high interest rates. Currently, the rate is the same regardless of your account size, but its website advertises different interest rate tiers based on balance, so that could change. Synchrony also makes it easy to avoid fees, requiring only a $30 minimum balance.
Like other top money market accounts, Synchrony Bank prides itself on being there when you need it by offering you account access tools through its website and mobile application. It also provides flexible customer service hours Monday through Saturday to assist you when questions and concerns arise. If you are looking for a high interest money market account with great service, I've found Synchrony Bank to be a good choice.
AbleBanking Money Market Account Review
- Easy account setup
- Top interest rates
- Competitive fees, but currently higher than Ally and Discover
I looked into AbleBanking thanks to its age and the its money market account rates. It is a division of Northeast Banking, which started its operations in 1872. It operates on the mantra that banks should spend more of their money and attention on its customers than on advertising and brick and mortar branches. To this end, Northeast Banking came up with AbleBanking.
AbleBanking operates similarly to other online banks like Ally and Synchrony Bank. It offers products such as savings accounts and money market mutual funds. Currently, it does not offer online checking accounts, which makes it a less attractive option if you want to do all your banking in one place.
To open a money market account, you can visit its website to fill out the short and secure application. The high interest money market requires a $250 minimum deposit. From there, you can take advantage of the competitive rates ableBanking provides you with.
AbleBanking offers some of the most competitive returns on its money market accounts. Overall, it falls short because it doesn't offer debit cards or checks, and it limits your access to your funds that are invested at the bank so consumers should be wary of this when selecting a bank.
Earn the Highest Rates with the Best Money Market Accounts
With many banks offering high-interest checking accounts that require consumers to jump through hoops to earn the best rates, people have gotten used to every deal a bank offers coming with a catch. Due to the transaction restrictions on money market accounts, the hoops that you can be forced to jump through on money market accounts are limited.
Some banks will offer a higher interest rate for higher account balances. Others will offer introductory bonuses to their accounts' interest rates. Beyond these two catches, the advertised rates are what you will earn, so you can feel confident in predicting the growth of your savings.
Best Money Market Account Restrictions
Since money market accounts are a form of a savings account, there will be restrictions on how you can use the account. Federal regulations limit you to making a maximum of six of the following transactions within a statement period:
- Write checks that are cashed on the account
- Transfers out (electronically or via phone)
- Pre and post-authorized debit card purchases.
For every transaction past the sixth, your bank will assess a fee per transaction. Further, if you have more than three statement periods within a year with more than six transactions, federal regulations will force the bank to either close the account or convert it to an account with unlimited transactions such as a checking account. You can bypass these regulations by requesting a cash withdrawal in person or buy using your debit card at ATMs, where you can make unlimited withdrawals.
Along with transaction limits, many banks will require you to make a minimum deposit to open the account. This amount is generally higher than the minimum for a savings account and might vary from a few hundred to a few thousand dollars, so it's important to verify what the financial institution's requirements are in this regard.
Best Money Market Accounts Recap
It's no wonder that money market accounts are so popular, holding nearly $3 trillion in assets nationwide. Money market accounts are great ways to build your savings more quickly than letting them sit in a checking account. Because all financial providers are not reputable, it's important that you compare different banks and credit unions to ensure you receive the best deal.
To do this, it's important to keep certain things in mind such as the provider's reputation, the fees assessed on the account, the yield offered and the customer service available to you. By measuring these things, you can find the best provider for your needs.
Best Money Market Accounts FAQs
What is the average interest rate on a money market account?
As of 2016, the average money market rate according to Bankrate sat at .26%. This rate is low, but unsurprising given the low interest rates available after the housing crash. As interest rates begin to rise, the rates offered by money market accounts will also rise.
What is a money market savings account?
A money market savings account is a type of financial account that tends to earn higher interest than a basic savings account. This is because money in these accounts is invested into very low risk financial instruments, like low duration bonds. Money market accounts are not 100% safe, or guaranteed by the FDIC, but having one lose value is exceedingly rare.
Which bank has the highest interest rate?
Online banks are generally able to offer the best interest rates because of their low overhead costs. Ally and Barclays both offer 1% interest for online savings accounts as of January 2017, but the best interest rate comes from Synchrony, who offers 1.05% of savings accounts.
What is a money market checking account?
A money market checking account is much like a money market savings account in that the money deposited in it earns a better rate of interest than the typical account because it is invested in very low risk bonds. The advantage of these accounts is that you can easily transfer money from it by writing a check.
Are money market accounts FDIC insured?
Yes, all money market accounts (even online ones) come with FDIC insurance up to $250,000. Not only will this provide you with protection similar to what you would receive with a traditional bank account, it gives you confidence that the bank you choose is legitimate.
Are there any fees for money market accounts?
Some banks will require you to carry an average daily balance, and if your balance dips below the average, they will charge you a monthly fee. Moreover, since banks view money market accounts the same as they would for a checking or savings account, you could still receive fees if you overdraft the account, if a deposit you made was returned or you requested a stop payment.