Getting a Money Market Account
Money Market account rates can ebb and flow with the economy, but these investment vehicles still offer earning rates that are often far superior to checking accounts and certain CDs.
Money market accounts (MMAs) are a great option for people looking to earn higher interest rates on their cash than is typically offered by a savings account at a traditional bank. Unlike a savings account, money market accounts often come with check-writing and debit card privileges to make your cash more accessible. However, MMAs are still limited by federal law to six withdrawals per month, just like a savings account. We compared the rates, fees, and services on the money market accounts at every major bank in America to find the very best options, even if you don’t have a large balance to deposit on day one.
Dropping interest rates create great opportunities for borrowers, but the effect that low interest rates have on savings products is not as ideal, as the two generally move inversely. In other words, when money becomes cheaper to borrow, people investing in money that can be borrowed — like money market accounts — earn less on these investments.
In April 2020, the market saw an average money market rate drop to 0.47% from 1.36% in May, according to Moody’s Analytics. There are currently no market indicators this month to signal that rates will be trending upward any time soon, which means that money market rates may stay low for the time being. Still, these rates are better than what you’ll earn from many savings accounts and CDs offered.
Best Money Market Account Rates of July 2020
|Bank||Max APY||Best For|
|Discover||0.90%||High account balances|
|Capital One||0.29%||Banking app|
|TIAA Bank||0.75%||Yield pledge|
|BMO Harris||1.65% (varies by location)||High APY|
Best Money Market Accounts of July 2020
- Ally — Best for online banking
- Discover — Best for high account balances
- Capital One — Best for banking app
- TIAA Bank — Best for yield pledge
- BMO Harris — Best for high APY
- Synchrony — Best for first-time savers
Ally — Best for online banks
There is no minimum balance requirement to open or maintain a money market account with Ally, and customers receive a debit card and up to $10 in reimbursed ATM fees at the end of each statement cycle. The APY rates on the account for July 2020 are 0.50%, regardless of the amount you have in your account. With Ally, you can expect zero fees on standard or expedited ACH transfers, postage-paid deposit envelopes and official cashier’s checks. Some services do come with fees, including overdraft fees, outgoing domestic wire fees and ATM fees greater than $10 a month. You can see a full list of fees here. Ally is an online bank, so it doesn’t operate any physical branches.
Discover — Best for high account balances
Another online banking option is Discover, which boasts a very high APY available for consumers and requires no money to open the account. For accounts with less than $100,000, customers can expect a .85% APY; for accounts with more than $100,000, the APY is .90%. Like most Discover accounts, the MMA has no maintenance fees, no minimum balance fees, no ATM fees when withdrawn at one of the 60,000 Discover ATMs nationwide, no item return fees and no insufficient funds fees or excessive withdrawal fees. The Discover app makes it easy and convenient to find its ATMs wherever you go. If you have other accounts with Discover, it’s easy to link those accounts and instantaneously transfer between them.
Capital One — Best banking app
Capital One has 755 branches and cafés throughout the US, as well as 2,000 ATMs. It offers a 0.29% APY on MMAs less than $10,000. Consumers can expect no monthly maintenance fees with a Capital One MMA, but for a full list of fees, be sure to check its website. Capital One’s MMA comes with a debit card and its banking app makes setting up transfers and linking accounts easy. Plus, Capital One accounts come with tools that help you save and keep track of your spending habits.
TIAA Bank — Best for yield pledge
An online bank with a network of over 880,000 ATMs nationwide, TIAA Bank Offers an APY of .75% for first-year money market account clients – one of the highest APYs in the industry. APY rates on smaller balances are still highly competitive spanning from 0.50% at the lowest level up to .70%.
There are no monthly maintenance fees with TIAA Bank, and its MMA is IRA-eligible. However, TIAA charges a host of fees, including overdraft fees of $30, stop payment fees, and fees for cashier’s checks and wire transfers (subject to the maximum six withdrawals per month).
The bank does offer a nice yield pledge promise, ensuring that the money market account rate will always be in the top 5% of competitive banks in the industry. Rates are checked weekly and adjusted if and when necessary.
BMO Harris — Best for high APY
BMO Harris has 600 brick-and-mortar locations nationwide, along with 1,300 ATMs. The BMO Harris money market account is available with a minimum opening balance requirement of $5,000. Your APY rate will depend on where you live, as rates vary by location. Money market account rates from BMO Harris do vary by account balance, but you won’t see a change until your daily account balance goes over $1,000,000.
There are no monthly maintenance fees associated with any tier of the MMA, although consumers should check the full list of associated and additional fees here. Customers will receive a debit card upon opening this MMA and checks can be ordered.
Synchrony — Best for first-time savers
Synchrony is an online bank that specializes in high-yield savings accounts. Synchrony offers the same APY to all money market account holders, regardless of daily balances. Their online savings calculator allows you to quickly see how much your money will earn for you in four different banks (including Synchrony) and how they all compare to the national average. MMA holders will receive an ATM card, but ATM withdrawal fees won’t be refunded. Synchrony does offer electronic and wire transfers, as well as checks for your MMA, but fees may apply.
What is a Money Market Account?
A money market account is essentially an alternative savings account, but it usually offers higher interest rates (including compounding interest) than your standard savings account would. Like a savings account, money market accounts are limited by federal law to six withdrawals per month. However, you don’t have to leave your cash untouched for a predetermined period of time like you would with a certificate of deposit (CD). A money market account is a great “in-between” account for people who need to save money, want to earn interest, but will likely need to access that money. That’s why some MMAs come with perks like check-writing and debit cards, to make your savings more accessible.
Money Market Accounts vs. Money Market Fund
While money market accounts and money market funds are often confused because they sound similar, but the two products are actually quite different. A money market account is a type of savings account that is a risk-free and an FDIC-insured way to earn money, but you’re usually limited on the number of withdrawals you can make over certain periods of time with an MMA.
A money market fund, on the other hand, is a type of mutual fund that only invests in highly liquid instruments such as cash and high credit rating debt-based securities. The reward can be greater from a money market fund, but this type of investment does carry a minimal amount of risk, as you can lose money if your investments don’t go as planned.
Still, the potential return on a money market fund is higher than that of a money market account because of the associated risk. However, the higher ceiling does not come with guaranteed profits, which you’ll get with a money market account.
Which is right for you? It depends on your financial goals, desired risk and financial portfolio. The right answer could be that one is better for you than the other or that both are great for you. Or, there’s a chance that neither type of investment could fit your portfolio. Compare the risks and potential (or guaranteed) reward against your goals and current portfolio to make the right decision.
Money Market vs. Other Accounts
Money Market Accounts vs CDs
While MMAs and CDs are both savings options that accrue interest, there are some key differences. Certificates of deposit (CDs) usually offer higher interest rates, but lock your savings up for the length of the term (anywhere between three months and 10 years), during which time you can’t withdraw a cent without facing a stiff penalty fee. Money market accounts, on the other hand, are much more flexible. You can make up to six withdrawals per month, and some banks even provide checks and debit cards. But in exchange for that flexibility, MMAs usually won’t have interest rates as high as CDs, especially compared to long-term CDs. Still, both options will often have higher rates than a traditional savings account at a brick-and-mortar bank. Compare CD rates to see how they stack up against MMA’s today.
Money Market Accounts vs High-Yield Savings Accounts
High-yield savings accounts are very similar to MMAs in that they both offer a fairly high interest rate. More often than not, brick-and-mortar banks like Chase and Bank of America offer money market accounts as a higher-interest option to traditional savings accounts, while some online banks like Capital One skip money market accounts altogether and offer high-yield savings accounts instead. If maximizing your earning potential is your biggest priority, it makes sense to go with whichever account offers the highest interest rate, but some money market accounts do offer unique perks like check-writing and debit card privileges, making them more accessible than a high-yield savings account.
Money Market Accounts vs Checking Accounts
Money market accounts should never be a substitute for a checking account. While some banks will allow you to conduct online bill payments, write checks, or use a debit card with an MMA, they’re still restricted to six withdrawals or transactions per month by federal law, making it impossible to use a money market account for everyday spending like you would a checking account. Only use an MMA for cash you won’t need to access very often.
The final word
Money market accounts pair the benefits of savings accounts with some of the liquidity and flexibility of checking accounts. Finding the best money market account rates at trusted banks and credit unions ensures you’re setting yourself up to get the highest return possible on your money.