Money market accounts haven’t been drawing much attention in recent years, and it’s easy to see why. Interest rates on money market accounts have been downright microscopic.
We’re talking 0.25% – if you’re lucky. Most pay no more than 0.10%.
That’s hardly better than saving cash under your mattress.
But there are a small handful of banks paying interest rates on money market accounts that rival those of certificates of deposit (CDs).
And unlike CDs, money market accounts don’t tie your money up for a year or more in order for you to get the highest bank interest rates.
What is the savings rate on these high-interest money market accounts, you might ask? Below you’ll find regularly updated money market rates.
Since banks who pay high-interest rates are so few and far between, we’ve compiled a list of banks offering the best money market accounts available right now.
Top 10 Best Money Market Account Providers In 2019
- CIT Bank
- Discover Bank
- Capital One
- Nationwide Bank
- UFB Direct
- First Internet Bank
First, What Are Money Market Accounts?
Money market accounts are very similar to high yield savings accounts.
Both are interest-bearing accounts, with limited access. They also offer variable interest rates. The rates are based on either a third-party metric, or one unique to the particular bank. This means interest rates paid on the account will vary based on changes in the metric.
This is unlike CDs, which are time deposit accounts, that pay a fixed rate of interest for a definite period of time. For example, a CD might pay 0.95% interest on a 12-month term.
In order to get that rate, you have to agree to tie your money up for the stated term. If you withdraw funds before the term is up, you’ll be hit with a penalty that can be as high as six months’ worth of interest.
On the other hand, money market accounts are very different from checking accounts.
Checking accounts typically pay no interest but offer unlimited access to your money. That means you can have an unlimited number of deposits, withdrawals, debit purchases or transfers. Money market accounts limit the number of transactions, generally to no more than six per month. More on that in the next section.
But one thing money market accounts have in common with checking accounts, savings accounts, and CDs is that they are FDIC insured. This means that you’re protected against bank failure for up to $250,000 per depositor, per bank.
You can think of a money market account as something of an interest-bearing “light” checking account.
Disadvantages of Money Market Accounts
Before moving money into a money market account, it’s important to understand the disadvantages they come with. For example…
Interest rates aren’t fixed. Rates on money market accounts are completely variable. A bank may offer a very attractive initial rate, then withdraw it later.
For example, they may pay a rate of 1.50% for one year, after then it drops down to a more typical rate of 0.10%. For this reason, they’re generally not suitable to hold long-term cash investments.
Limited transactions. In the last section, I told you how money market accounts are generally limited to six transactions per month. That isn’t the banks being strict, but the federal law applies to money market accounts.
The law is Federal Regulation D. It applies to savings accounts as well as money market accounts. The regulations says the following about the number of transactions permitted:
“…allow no more than six transfers or withdrawals per calendar month or statement cycle of at least four weeks for the purpose of transferring funds to another of the depositor’s accounts at the same institution or making third-party payments by means of preauthorized, automatic, or telephonic transfers or transfers or withdrawals made by check, debit card, or other similar order made by the depositor and payable to third parties.”
Though as you’ll find with the banks listed below, some count only transfers and withdrawals toward the limit, while other banks count all transactions, including deposits. Most banks charge an “excess transaction fee” if you exceed the limit.
If you plan to use a high interest money market as a high activity account, you’ll be better served opening a high-interest checking account that puts no limits on your transactions. Money markets are better used as a place for nearly idle cash, or something close to it.
Why You Might Prefer a Money Market Account to a CD or Savings Account
A money market account will work better than a CD if you’re looking to earn interest on savings but want to retain regular access to the funds. If you put money into a CD, you’re essentially tying it up for the full term of the certificate. If you need access to the funds, you’ll pay a steep penalty for the privilege.
Savings accounts and money market accounts are very similar. Savings accounts often pay interest rates comparable to money market accounts. And both are subject to the six transactions per month limit.
But one big advantage in favor of money market accounts is check writing, which savings accounts don’t offer.
Which will work better will depend on the interest rate being paid on either at the same bank or by banks in your area. You may also find the interest rate paid on a money market account to be higher than shorter-term CDs.
For example, some of the banks on this list will pay a high rate of interest for at least one year. The rate is likely higher than what your bank or another bank will pay on a one-year CD.
It will make no sense to tie up your money in the CD, when you can earn a comparable or higher rate in a money market account, with less restriction on access to your money.
Money markets are best used for accounts that will be less active than checking accounts, but not totally inactive, the way CDs are.
What Is A Good Savings Rate on Money Market Accounts?
Not all money market accounts are created equal. To ensure you’re getting the absolute best money market rate, you need to do your research.
Luckily, I’ve made the search easier for you, curating the top savings rates a money market account can buy.
While strolling into your local bank might uncover paltry returns, scrolling through online banks can yield the highest bank interest rates out there.
According to the FDIC, the national average money market rates of return are 0.16% on money market account balances below $100,000, and 0.25% on balances above (as of December of 2018).
It sounds bleak, I know. While that may be the average across all banks. it doesn’t paint an accurate picture of the banks below.
So what do you gain by siding with an online bank’s money market account, in addition to flexibility and check-writing capabilities?
To answer that question, we have to look at the top 10 accounts for money market rates.
The Best Money Market Accounts
You’ll find every bank on this list pays well above the FDIC average rates I just shared. In fact, each bank pays several times more than national average rates.
The CIT Bank Money Market Account may take the prize as the highest yielding money market account anywhere. The current APY is 1.85%.
What’s more, you can open an account with as little as $100. The CIT Bank Money Market Account isn’t available as an IRA, but it is for custodial accounts.
There is no monthly maintenance fee, but there is a $10 per transaction excess transaction fee (for more than six transfers or withdrawals per month) with a maximum of $50 per month.
One of the factors that makes the CIT Bank Money Market Account so attractive – apart from its very high yield – is the number of other high interest rate savings products the Bank offers.
For example, they currently offer Term CDs and Jumbo CDs with rates that match the Money Market Account – in case you want to lock in the rate for a longer-term. They even offer their RampUp Plus CDs, which gives you the option to adjust your rate if rates go up.
Their Premier High Yield Savings has one of the most attractive rates available anywhere, and the new Savings Builder High Yield Savings account rewards you with 2.15% APY if you meet a $100 minimum deposit.
CIT Bank offers both online and mobile banking, as well as custodial accounts, home loans, and both business loans and equipment financing.
Everbank offers what they refer to as their Yield Pledge Money Market. The “pledge” is their promise to keep the interest rate within the top 5% of competitive money market accounts.
The Yield Pledge Money Market requires a minimum of $5,000 to open and can accept balances up to $250,000.
The current APY on all balances is an impressive 2.15%. That’s a one-year intro APY, so we’ll have to see what happens after the year is up. (I guess that’s when the “pledge” will become really important!)
Still, guaranteeing that rate for one year is an incredibly generous arrangement. In the normal course of business, money market account rates fluctuate.
The Yield Pledge Money Market has no monthly account fee. You’re limited to six transfers per month. Like Ally Bank, they charge in excess transaction fee of $10 per transaction. The account is eligible for use for an IRA.
You can use the free Ally Bank mobile app to make mobile payments and mobile deposits, as well as to send money securely to family and friends.
And as you might expect, Everbank has the full range of other savings products, including high-interest checking, and an especially impressive lineup of CDs.
BBVA Compass Bank
BBVA Compass Bank offers their ClearChoice Money Market Account. You can open an account with a minimum of $25, all the way up to more than $5 million.
What’s most surprising is that they pay a high yield of 1.80% APY. With BBVA Compass Clearchoice Money Market, interest compounds and is credited monthly, and you can withdraw money with ease from a BBVA branch or one of BBVA’s ATMs without incurring any fees.
You can also link your money market account to your BBVA Compass checking account to get Overdraft Protection.
In addition to its money market accounts, BBVA Compass Bank offers both online and mobile banking that allows you to manage your bank accounts, make transfers, view balances, pay bills, and deposit checks from your smartphone with the mobile app.
The bank participates in the Allpoint worldwide network of more than 55,000 ATMs, all surcharge-free.
They also offer savings accounts, CDs and IRA accounts, as well as insurance, investments, and wealth management services.
Ally Bank is well known for having some of the highest interest rates on savings available. Their money market accounts are no less impressive.
Rate offerings are as follows:
- Balances up to $24,999 – 0.90% APY
- Balances of $25,000 and up – 1.00% APY
Ally Bank Money Market Accounts have no monthly maintenance fees. They offer the ability to deposit checks remotely with Ally eCheck Deposit.
In fact, the account comes with both online and mobile banking services.
It also provides a debit card and standard checks at no charge. However, as is typically the case with money market accounts, you are limited to no more than six withdrawal transactions per month. (There is a $10 per transaction fee for excess transactions.)
But you can make unlimited deposits. That would make this a perfect account to collect money in – while earning high interest – then transferring it to a checking account for more frequent activity.
You can use any Allpoint ATMs in the US (there are over 43,000!) for free. But Ally Bank will also reimburse up to $10 per statement cycle for fees charged at nonparticipating ATMs.
In addition, you can also take advantage of their other great services, including 24/7 live customer care, high-interest checking, multiple savings products and CDs, as well as some of the best auto loans available anywhere.
Probably best known for their credit cards – particularly the Discover it card – Discover Bank also has very attractive rates on its money market account. The rates look like this:
- Balances under $100,000 – 1.85% APY
- Balances $100,000 and over – 1.90% APY
Though there’s a minimum initial deposit of $2,500, there’s no monthly fee as long as your balance doesn’t fall below this level. If it does, there’s a fee of $10 per statement cycle charged if the average daily balance in the account is less than $2,500.
The Discover Money Market comes with a debit card that can be used at more than 60,000 ATMs with no fee. Checking is also available on the account.
You will have access to both the online and mobile apps, where you can make deposits on the go. Your account also includes Discover’s online bill pay service.
In addition to Discover credit cards, the Bank also offers other bank products, such as Cashback Checking, Online Savings, CDs and IRA CDs.
Capital One offers one of the highest yielding money market accounts available.
Their 360 Money Market account is currently yielding 2% APY on balances over $10,000.
On balances below $10,000, the APY is 0.85%.
There are no fees, either to open the account or for monthly maintenance. What’s more, you can link your 360 Money Market with other Capital One accounts, or with accounts you hold at other banks.
Capital One has a mobile app that enables you to deposit checks, transfer funds, or track your progress on savings goals – all on the go.
Capital One has a full range of high-interest savings products, including 360 Checking, 360 Savings, and 360 CDs. And as a full-service bank, they also provide credit cards and auto loans.
They even provide the ability to invest with them, enabling you to keep all your assets with the same institution.
That’s “Nationwide” as in Nationwide Insurance. Nationwide Bank offers a money market account with rates based on two tiers:
- $0 to $9,999.99 – 1.15% APY
- $10,000 and above – 1.55% APY
The Nationwide Bank Money Market requires a minimum initial investment of $1,000. There is no monthly maintenance fee as long as you maintain a minimum daily balance of $1,000 or more. If your account balance falls below that level, you’ll be charged $8 per month.
The account offers both online banking and mobile banking. Mobile banking comes with eDeposit capability, that allows you to deposit checks remotely. You can access your account through more than 77,000 surcharge-free ATMs, but of course, there is a limit of six transactions per month.
As a full-service bank, Nationwide Bank also offers checking (E-Checking), savings, CDs, credit cards, auto loans, mortgages and home equity loans and home equity lines of credit.
Though not a household name, UFB Direct offers one of the highest paying money market accounts available. The UFB High Yield Money Market Account is currently paying 1.60% APY on all balances.
The minimum initial investment is $5,000. There’s a monthly maintenance fee of $10, but only if your average daily collected balance falls below $5,000.
The account is available for both online banking – which includes a limited bill pay feature – and mobile banking. Features include mobile deposit on your smartphone and their MyDeposit that allows you to deposit checks instantly from your home or office.
The account comes with a free Visa debit card, which is available on request, as well as free unlimited check writing privileges.
Another bank that isn’t a well-known, but pays some of the highest rates on money markets is ableBanking. Their Money Market Savings account is currently paying 1.85% APY on all balances.
You can open the account with as little as $250, and of course you’re limited to no more than six withdrawals per month. There is no monthly maintenance fee.
However, the account does not offer either a debit card or check writing privileges. But my guess is that with the rate that high, you’ll be looking to put money into the account – not taking it out.
ableBank is based in Maine, but the Money Market Savings account is available to all US residents across the country.
The bank also has a charitable connection. They contribute money to various 501(c)3 charities, including little leagues, churches, and neighborhood food pantries. They also encourage customer giving through their accounts. If that isn’t enough, they’re also offering a $25 New Customer Gift when you sign up.
ableBank is the online division of Maine-based Northeast Bank, a full-service bank established in 1872. The bank has $1.1 billion in assets, and nearly 200 employees.
First Internet Bank
A First Internet Bank money market account pays 1.81% APY on balances up to $250,000, and 2.02% APY on balances above.
You can open a money market account with as little as $100. However, there is a $5 monthly maintenance fee, unless your average daily balance is $4,000 or higher. If you have $2,000 in the account, earning 1.16%, you’ll earn $23.20 in interest for the year, but pay $60 in monthly maintenance fees. Translation: the minimum account size is $4,000!
If you exceed the limit of six transfers and withdrawals, there is a $5 per item excess transaction fee.
There’s one other downside to the First Internet Bank money market account.
ATM cards are available for sole proprietors only. But it may not be the negative it appears on the surface.
After all, if you’re limited to just six transactions a month, an ATM card might make it too easy to exceed that number, leading to excess transaction fees. Once again, money market accounts, in general, should be limited-use accounts only.
When we think of Sallie Mae, we normally think about student loans – which is what they’re best known for.
But Sallie Mae also has one of the best money market accounts available anywhere.
The current yield on the Sallie Mae Money Market is 2.20% APY, compounded daily, but paid monthly.
Best of all, there are no minimum balance requirements and no monthly maintenance fees. You can write checks from your account, and well you can make free transfers, subject to a maximum of six withdrawals per month.
One small inconvenience is that Sallie Mae doesn’t accept cash or money orders to fund the account. That must be done strictly with either check or electronic deposits.
Sally Mae also offers other savings products. These include high yield savings accounts and high-yield certificates of deposit. And naturally, it’s a prominent source of student loan financing.
Dime Community Bank
Dime Community Bank offers the DimeDirect Money Market. The rate isn’t as high as some of the other banks on this list. But it’s a healthy return nonetheless, and much, much higher than money market rates being paid by local banks. The DimeDirect Money Market is available nationwide
The current yield on the DimeDirect Money Market is 1.35% APY. That rate applies to all balances up to $500,000.
On balances over $500,000, the rate falls to 0.20% APY. There is no monthly maintenance fee, but fees and penalties do apply if you make more than six withdrawals per monthly statement cycle.
With the account, you have access to free online and mobile banking. You can enjoy the bill pay feature with online banking, as well as remote check deposit from your smartphone (iOS and Android) with mobile banking.
In addition, Dime provides 24-hour automated phone service.
Dime Community bank offers the full range of services for personal banking, business banking, and commercial lending.
Money market accounts operate in a fluid universe.
Banks who pay high-interest rates withdraw them, and new banks enter the market to take their place. That’s why you need to pay close attention to the best money market accounts available on an ongoing basis.
In addition, you may open a money market account with a bank that pays a very high-interest rate for no more than a few months or one year.
At the end of that time, the rate may drop down to a more normal level, and you’ll be shopping for a new bank.
One advantage you always have with a money market account is flexibility.
Unlike a CD, you don’t have to lock in your money for a certain term. You can keep an account with the bank that’s paying high interest, then move your money to another when the situation changes.
In the meantime, you’ll still have access to your funds for other purposes.
That’s the advantage of the best money market accounts. You earn interest comparable to CDs, but you still have access to your money. It’s not a bad deal – at the right interest rate.