A Guide to High-Yield Money Markets

May 7th 2016


Image Courtesy of Flickr, via 401(k) 2013

High-yield money market accounts are an excellent way to earn more interest without exposing yourself to greater risk. These accounts provide relatively easy access to your funds without the low interest rates of a standard bank savings account. Here, you can learn more about high-yield money market accounts, along with some of the best accounts available today.

Overview of Money Market Accounts

Money market accounts (MMAs) are a type of account provided by banks and credit unions. Money market accounts are also sometimes known as money market savings accounts or money market deposit accounts (MMDAs).

One of the most important features of a money market account is that they are federally insured by the FDIC. If you choose a high-yield money market account, you can earn substantial interest. However, you will typically need to maintain a high minimum balance if you want to avoid fees.

Federal Reserve regulations limit the amount of transfers and withdrawals with a money market account to six or fewer a month, but this does not include withdrawals made by telephone, messenger, mail or at an ATM. If there is a check writing facility for the money market account, you will be limited to writing six checks per month.

Benefits of Using a Money Market Account

Money market accounts will generally provide you with a better return than a traditional savings account. However, because of the average minimum balance required, they’re typically more suitable for people with significant savings and are able to maintain that balance on a month-to-month basis. Compared to certificates of deposit (CDs), it is easier to make a withdrawal with a money market account. Therefore, they are also suitable for people who may need to access to their money occasionally. Finally, because money market accounts are insured by the FDIC, they provide a risk-free account while still earning reasonable interest.

The Difference Between Money Market Accounts and Money Market Mutual Funds

Investors need to be careful to distinguish between money market accounts and money market mutual funds. Money market mutual funds are a completely different type of investment. Money market mutual funds are not insured by the FDIC. They will generally attract a higher rate of return, but they are also more risky. Money market mutual funds can lose their value depending on market conditions, which is not the case for a money market account.

The Best High-Yielding Money Market Accounts

There are many different money market accounts you can choose from. Below, you can find some of the best high-yield money market accounts in the United States.

Sallie Mae Money Market

Want to earn a rate that’s more than 11 times higher than the national average? Then take a look at the Sallie Mae money market account, which offers a high 0.9 percent APY rate along with no monthly maintenance fees. You can also write checks directly from your account, and online account management is available 24 hours a day. The account can be opened online in just a matter of minutes.

Ally Bank Money Market

Ally Bank money market accounts feature a healthy 0.85 percent APR, no minimum deposit and no monthly maintenance fees. You also get unlimited deposits, ATM withdrawals and an additional six transactions. Interest on the account is compounded daily, so it adds up faster. You can also use the Ally eCheck deposit feature to deposit checks into the account remotely.

First Internet Money Market Savings Account

The First Internet money market savings account features a 0.80 percent APY. Unlike some of the other high-yield money market accounts, there is a monthly maintenance fee of $5 and you will need to maintain an average daily balance of over $4,000 if you want to avoid fees. The First Internet money market account allows six transactions per month and comes with an ATM card.

Barclay’s Money Market

Barclay’s money market account features one of the highest interest rates in the U.S. for this type of account. Currently, the Barclay’s money market account has a 0.90 percent APY. There is also no minimum balance to open the account, and you can link the account to any existing United States bank account. The linked account can be added or changed at any time. Barclay’s money market accounts are insured by the FDIC for up to $250,000 per depositor.


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