Updated September 1, 2018
Traditional banks are paying very low interest rates on money market accounts. For example, BB&T pays between 0.01% and 0.04% APY. Fortunately, you do not need to settle for such ridiculously low rates. You can easily find the best money market rates at internet banks paying 1.85% or more. If you put $50,000 into BB&Tâ€™s account at 0.04%, you will only earn $20 of interest over one year. That same money in an account paying 1.85% would earn you $925 of interest. And you can typically open and fund an online money market account in less than 10 minutes. Also, the differences between savings accounts and money market accounts are narrowing because rates on money market account are increasing each year. You can currently earn the same top rate with a savings account from one bank and a money market account from another.
MagnifyMoney searches over 12,000 banks and credit unions to find the money market accounts paying the highest interest rates. Competition has been increasing and there is a pricing war. As a result, this month there are a lot of new names on the list (many of which you probably will not recognize). Here are the best rates for September 2018:
CIT Bank recently launched a money market account with a 1.85% APY. You only need $100 to open the account and start earning the APY, and they donâ€™t charge any monthly maintenance fees. If you appreciate the option to write checks with your money market account, or use a debit or ATM card to withdraw funds, this account may not be for you. You can fund the account with ACH, mobile check deposit, or by mailing a check directly to the bank. Accessing funds can be easily done through their online banking platform or mobile banking app. Just keep in mind that due to federal regulations, youâ€™re not able to conduct more than six transactions in a statement cycle. CIT Bank will charge a $10 fee for each additional transaction. While CIT is a thriving bank, you can be assured that your funds are protected by the FDIC up to the legal limit.
Ally Bank is a very popular internet-only bank. If you keep a daily balance of $5,000 or less, you will earn the 0.90% APY. If youâ€™re able to keep a minimum daily balance of $25,000 the APY increases to 1.00%. Although the interest rate on the money market account is not the highest, Ally does offer a very competitive overall package â€“ particularly if you link the account to an Ally checking account. The checking account has no minimum balance and no monthly fee. You can link your money market account to your checking account to provide overdraft protection. Money would be transferred to your checking account with no transaction fee if you ever made a mistake. You would be able to access your money market account with your Ally ATM card, which has free AllPoint access and up to $10 of non-Ally ATM fees reimbursed every month. This money market account is a nice way to provide yourself with overdraft protection while earning interest. If you donâ€™t need check-writing capabilities on your savings, you would still be better off with Allyâ€™s savings account.
Virtual Bank, a division of IBERIABANK, is currently offering an introductory rate on their money market account that is the highest available. This rate is guaranteed for 12 months and will adjust to the standard rate that is in effect at the time. New customers can earn the 2.01% APY by depositing a minimum of $100. While there isnâ€™t a minimum balance requirement to earn the APY, there is a balance requirement to avoid incurring the $5 monthly service fee. All youâ€™ll have to do is maintain a daily minimum balance of $100 and theyâ€™ll waive the monthly fee. While this account doesnâ€™t have any check writing capabilities, you can easily move money in and out of the account via ACH. Virtual Bank has a mobile app, that has the mobile check deposit feature, in addition to their online banking platform.
BankPurely, a division of Flushing Bank, currently offers a 2.00% APY on their money market account. Youâ€™ll have to either deposit a minimum amount of $25,000 or grow your balance to that amount in order to earn interest. If youâ€™re not able to deposit that amount, you may want to go with VirtualBank or Sallie Mae since they have the same rate for a lower deposit amount. However, BankPurely does provide an ATM card, which gives you access to surcharge-free ATMs within the Allpoint Network. Just keep in mind that youâ€™ll be limited to withdrawing $1,000 per business day. Per Federal law, youâ€™ll also be restricted to making six transfers per month. Youâ€™ll have access to online banking as well as to their mobile banking app to manage your account. Plus, if you open an account with BankPurely, theyâ€™ll plant a tree.
If you have student loan debt, you probably are not very excited to see Sallie Mae at the top of this list. However, many people are unaware that Sallie Mae also operates an internet-only FDIC-insured bank with some of the best interest rates in the country. You can earn 1.90% APY, compounded daily and paid monthly. There is no minimum balance and no monthly maintenance fees. You will have check-writing capabilities (although the standard money market limit of six per month applies to this account). The easiest (and best) way to fund and access your funds is via electronic transfer from your existing checking account. If you want a simple account with no fees and check access â€“ this is a good bet. Sallie Mae has just recently increased the APY, making this one the best rates in the country.
ableBanking is a division of Northeast Bancorp, a community bank headquartered in Maine since 1872. The bank has over $1 billion in assets, and your deposit would be FDIC insured up to the legal limit. At 1.85% APY, this is the highest money market rate that we have been able to find (from a bank) in the country. There is a minimum deposit of $250, no monthly fee and you do not need to be a resident of Maine (any US resident can open an account). Unfortunately, the account does not come with check-writing privileges and there is no ATM access. You can deposit and access your funds via ACH (electronic transfer), which can take a couple of days. Just remember: there is a limit of 6 withdrawals per calendar month. When we called to ask questions about the account, we could reach a customer service representative very quickly. This is a good option from a small bank with a great high rate.
You may think of credit cards when you think of Capital One, but donâ€™t overlook their deposit accounts. While they donâ€™t require a minimum deposit amount to open the account, you will have to maintain a balance of $10,000 or more to earn their 1.85% APY. If your balance is less than that, youâ€™ll earn an APY of 0.85%They donâ€™t impose any monthly fees, and while they donâ€™t offer checks, they do provide you with an ATM card that you can use to withdraw up to $1,000 per day. You can make an unlimited amount of withdrawals from an ATM per month, but remember that youâ€™re limited to making only six transfers per cycle due to Federal Law. However, Capital One will close the account if you go over six transfers three times within a 12-month period. This is an online-only account, so you canâ€™t go to a branch to open or maintain the account. Fortunately, they make banking-on-the-go easy with their mobile banking app.
East Boston Savings Bank, or EBSB Direct, is a fairly large bank located in Massachusetts. They have over $5 billion in assets and have only been around since 1991. Currently, theyâ€™re offering a 1.80% APY on their money market account. While youâ€™ll only need $2,500 to open the account, youâ€™ll have to have a minimum balance amount of $10,000 to earn the APY. If you have a balance between $10 and $10,000, youâ€™ll earn an APY of 0.50%. While this account does come with Visa debit card and checks, they do charge a monthly maintenance fee of $8 if youâ€™re not able to maintain a minimum daily balance amount of $2,500 during the statement cycle. Youâ€™ll be limited to six transfers per statement cycle per Regulation D and if you exceed that amount of transfer, EBSB Direct will charge $15 per additional transfer. While they offer online banking, they donâ€™t currently have a mobile banking app.
With a minimum deposit amount of $100, you can open a money market account with Salem Five. While they donâ€™t offer check-writing capabilities, they do issue a debit card to make withdrawing funds easier. Salem Five also complies with Regulation D by limiting the number of transactions account holders can make to six. If the limit is exceeded, theyâ€™ll charge $10 per additional transaction. One other limitation this bank imposes is an External Transfer limit. You will only be able to transfer $5,000 per day and $20,000 per month. So, this account may not be right for you if you tend to withdraw more those amounts. While Salem Five truly does offer a great rate for the right price with this account, they do have a lot of limitations including their online and mobile experience.
My Banking Direct is part of New York Community Bank, which was established in 1859. New York Community Bank created My Banking Direct as a way to offer competitive rates to consumers and the money market account does just that. Currently, the money market account offers a high rate of 1.75%, but only if you deposit and maintain a balance of $25,000. However, you only need $2,500 to open the account and begin earning 0.25% APY. If your balance increases to $5,000 or you deposit the amount when you open this account, youâ€™ll still earn a very good APY of 1.50%. My Banking Direct doesnâ€™t charge any monthly fees on this account and provides check-writing capabilities. In addition to managing this account online, they also have a mobile app with mobile deposit functionality.
Self-Help is a credit union that anyone can join. If you donâ€™t live, work or worship in one of their eligible counties, you can join by donating $5 to the Center for Community Self-Help. The contribution is tax deductible and will make you eligible for credit union membership. (You can learn more about how to join the credit union here.) At a credit union, your funds are insured up to $250,000 â€“ but it is by the NCUA instead of the FDIC. The money market offers an APY of 1.57% on balances from that are at least $500. You also need to maintain the balance during the month â€“ otherwise you will be charged a monthly maintenance fee. You are allowed 6 free withdrawals or transfers from the account each month (including checks).
Premier Members Credit Union is open to anyone willing to make a $5 donation Impact on Education, a charity for the Boulder Valley School District. This credit union is currently offering an incredible rate of 4.00% with only $5 to open the account. You can earn this APY on balances up to $2,000. Amazingly, even if you grow the balance up to $5,000, youâ€™ll earn 1.49% APY. As the balance increases, the APY decreases to the following:
Premier Members Credit Union rewards low balance savers by placing the highest rate with the lowest deposit, but if the balance grows they start using a reverse tier system where they blend the APY as the balance grows. Checks are available with this account, but you can only make six withdrawals per month. Each additional withdrawal will be assessed a $10 fee.
1. Should I open a savings account or a money market account?
Many years ago, money market accounts were higher risk and paid higher returns. The financial crisis of 2008 changed all of that. Money market accounts are now FDIC-insured up to the legal maximum ($250,000 per institution per individual). Interest rates are now very similar â€“ and there is no material difference. In other words â€“ choose whichever account you want.
In general, you tend to get slightly lower interest rates on money market accounts because you have check-writing capabilities. The best savings accountsÂ pay at leastÂ 1.50% APY â€“ very similar to the rates on this page. But at Ally, for example, you can get 1.35% APY on a savings account (no check-writing) and 0.90% on the money market account (with check writing). Â Â
We have written a full explanation of the difference between money market and savings accounts here.
2. Am I willing to make a longer term commitment?Â
Savings accounts and money market accounts pay much lower interest rates than CDs. Right now you can easily get a 1-year CD paying 1.85% APY (with only a $2,000 minimum). You can find the best CD rates here. If you build a CD ladder, you can take advantage of 5-year rates that are now as high as 3.00%.
Money market accounts are great places to keep money that you might need immediately. But the interest rate on a money market account can change right away, at the bankâ€™s discretion. To lock in a higher interest rate, you should consider a CD. If you need to get access to your CD early, would forfeit interest (typically from 3-6 months). In most circumstances, putting more of your money into CDs can really help boost your returns.
3. Is a money market account the same as a money market fund?Â
No, money market accounts (offered by FDIC-insured banks) are not the same as money market funds (most likely sold by your broker). In fact, we really donâ€™t know why people even buy money market funds in the current environment.
For example, Vanguard offers the Prime Money Market Fund. Like other money market funds, this one â€śinvests in short-term, high-quality securities.â€ť Its objective is to keep the fund trading at $1 and generate a decent return. Right now that return is 1.00% â€“ a bit lower than the returns you see from the money market accounts listed in this article. However, money market funds do not have FDIC insurance.
Most people compare the return of a money market fund (sold by their broker) to the interest rate paid by a traditional bank (0.03%, sold by their local bank teller). As a result, they are willing toÂ take the risk of a money market fund. However, as you can see from the best money market accounts in this article, you can get FDIC insurance and beat the return of most funds.Â Why earn 1.00% with no FDIC-insurance when you can easily earn 1.60% and have FDIC insurance.
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