Finding the best Money Market Account rates in the new year

Money market accounts (MMAs) can be a great low-risk investment for building that emergency fund or storing extra cash. They offer better interest rates than personal savings accounts but are more liquid than certificates of deposit (CDs).

Unfortunately, even the best money market accounts haven’t been immune to sinking interest rates. According to Bankrate, the average MMA interest rate has sunk from 0.52% at the beginning of 2012 to 0.39% at the end of 2014. Not super impressive, but savings accounts and one-year CDs are faring even worse with average rates of 0.08% and 0.26%, respectively. If you want to know more about the differences between money market accounts, savings accounts, and CDs, keep reading.

As 2014 winds down, the best money market account rates are hovering near 1.0% APY regardless of minimum deposit.

The good news is there are many competitive options that will keep you near these benchmarks for the best money market rates. Internet banks, traditional banks and alternative lending institutions are all jocky-ing for your deposits. So, the best strategy to start your search by using an online tool like the one below. With this tool, you can easily set the type of account you are looking for and your approximate balance to get a range of choices to compare.

If you dont feel like searching through so many options, and you want to just skip to the best money market accounts, read on.

The Best Money Market Accounts

I’ve combed through several MMAs with competitive interest rates to find the best options for you. I’ll detail my criteria further down. For now, here are the top three money market accounts:

#1: Ally Bank Money Market Account

Ally Money Market Account is the MMA to beat because of its combination of high interest rates, easy-to-understand disclosures, and customer-pleasing perks. The 0.85% APY is among the best available, and there are no maintenance fees. Though other withdrawals are limited to six per month (standard for MMAs), Ally allows unlimited ATM withdrawals. The account also offers mobile check deposit and check-writing privileges. In my research, what really set Ally apart was its “straight talk product guide,” which laid out all the account details without requiring me to comb through fine print.

• Competitive interest rate
• Unlimited ATM withdrawals
• No minimum deposit or maintenance fees
• Mobile check deposit
• Easy-to-understand terms
• Check writing
• 24/7 online access

#2: Sallie Mae Money Market Account

Though they’re better known for student loans, Sallie Mae has an online bank offering high-yield savings options, including an MMA. Sallie Mae actually bests Ally with a slightly higher interest rate of 0.9% APY. There are no minimum deposits or monthly fees with Sallie Mae, which also offers check writing and mobile check deposit. The major downside here compared to Ally is that there are no ATM withdrawals, which can make your cash a bit harder to access.

• Competitive interest rate
• No minimum deposit or maintenance fees
• Mobile check deposit
• Check writing
• 24/7 online access

• No ATM withdrawals

#3: EverBank Yield Pledge Money Market Account

EverBank sets itself apart from the crowd by promising to keep its interest rate among the top 5% of banks nationwide. It also offers a new-customer promotional APY of 1.10% for a year. Other perks include no fees on positive balances, check writing, and mobile check deposit. On the downside, you need $1,500 to open an account. Also, though the promotional APY is impressive and the yield pledge is unique, EverBank’s ongoing APY of 0.61% isn’t as impressive as the interest rates offered by some of its online-bank competitors.

• Interest-rate pledge
• No monthly service fees as long as you have a positive balance
• Check writing
• Mobile check deposit
• ATM withdrawals
• 24/7 online access

• Minimum deposit is $1,500
• Non-promotional interest rate lower than some competitors

Runners-up

In my research, I found a few more MMAs worth noting that didn’t quite crack my top three. Still, they could be a good pick for you depending on your circumstances.

The ableBanking Money Market Savings is offering 1.02% APY higher than the non-promotional rates of any other MMAs I evaluated. This bank prides itself on low overhead, and returns part of that savings in the form of a $25 bonus to any charity you choose when you open an account. There’s a $250 minimum to open an account. Major downsides? No check writing and higher fees than the competition, including $30 for overdrafts.

Synchrony Bank’s Optimizer Plus Money Market Account offers a competitive 0.85% APY with no minimum balance. Check writing and ATM withdrawals are among the perks. The catch is that you have to keep at least $1,500 in your account to avoid a $15 monthly service fee.

Bank of Internet USA’s Money Market Savings Account doesn’t require a minimum balance and there are no monthly service fees. Check writing, mobile deposits, and even bill-paying services are included. You’ll need $100 to open an account. The 0.75% APY is solid, though not as impressive as other options. Fees can also be hefty here, including a $30 outgoing wire fee.

Discover Bank’s Money Market Account is one of the most convenient MMA options, with free withdrawals at more than 60,000 ATMs, check writing, debit card access, and bill pay. The catch for all these perks is a slightly lower interest rate 0.70% APY and a minimum balance of $2,500 to open an account. If you’ve got $100,000 on hand, you’ll earn a 0.80% interest rate.

Additional Banking Guides

To aid your banking search, here are some other useful guides on other important banking accounts. For example, finding the best online savings accounts could be a good alternative to money market accounts, as rates can fluctuate between the two options.

How I Picked the Best Money Market Accounts

Most savers choose a money market account instead of a savings account because they want a higher interest rate. Looking for MMAs with rates significantly higher than the national average effectively limited my search to online banks.

Unfortunately, none of the online banks fare significantly better than another when it comes to customer service reviews. For that reason, I did not consider customer reviews in my analysis.

If you prioritize a firm handshake, face-to-face relationships, and more reliable service, don’t overlook local banks in your search for MMAs. There are plenty that have fared well in J.D. Power’s 2014 Retail Banking Study. Just remember that you’re probably going to get a much lower interest rate than you would online.

The factors I considered in my search for the top money market accounts were:

• No or low minimum deposit. While some MMAs are out of reach for average customers because of their high minimum deposits, many online banks have made MMAs more accessible by easing this common requirement.
• High APY. As I said above, this limited my search to online banks.
• No or low maintenance fees. Some banks charge a monthly MMA maintenance fee regardless of your balance. Others waive it if you maintain a certain balance, and the best banks don’t charge one at all.
• Other fees are reasonable. I noted whether each bank was comparable to its competitors when it came to fees on overdrafts, wire transfers, and the like.
• Miscellaneous other perks. These include everyday things that make banking easier, such as check-writing privileges, unlimited ATM withdrawals, remote check deposit, online bill pay, and 24/7 account access.

After considering all of these criteria, Ally Bank, Sallie Mae, and EverBank rose to the top in my search for the best money market account.

If you need a basic primer on MMAs and whether or not they’re the right choice for you, read on.

What Is a Money Market Account?

A money market account (MMA) is a low-risk savings vehicle that banks and credit unions offer. Banks like MMAs because, unlike personal savings accounts, they can invest that money in other low-risk places including certificates of deposit (CDs) and bonds. The only thing they can do with the cash in your savings account is loan it to others. Also, unlike many personal savings accounts, you may need more cash to open an MMA, particularly at brick-and-mortar banks. Common account minimums are $1,000, $2,500, or even $10,000. Depending on your account, you may be able to write a limited number of checks. Federal regulations will limit you to no more than six electronic, check, or telephone withdrawals from your MMA per month.

In exchange for your larger balance and restricted withdrawals, you’ll receive a better interest rate than you would get with a personal savings account. Overall, an MMA can be a good choice if you want low-risk savings with a slightly higher interest rate as long as you can meet the minimum balance and will need only moderate access to your cash. If you can sock away your cash for a long period, be sure to compare your return from an MMA with what you’d earn from a CD. A CD may have a slightly higher interest rate, but you can’t withdraw cash early without a hefty penalty.

In practice, MMAs and personal savings accounts can be quite similar when it comes to online, high-yield banks that may offer similar interest rates for each product. You’ll see more of a difference at most local banks, where MMA rates will be substantially higher this is where the choice between the two becomes more compelling. However, you may run into higher minimum deposits, too. Ultimately, both are excellent places to keep your emergency funds or short-term savings.

Money market accounts vs. money market funds

Be careful not to confuse money market accounts with money market mutual funds (MMFs). You can find an MMA at just about any bank, but an MMF is a more serious investment product offered by brokerages and the like. MMAs are insured against losses by the Federal Deposit Insurance Corporation (FDIC); MMFs are not. (If you open an MMA at a credit union, your money is insured by the National Credit Union Administration.) Your bank guarantees a certain rate for your MMA, but the interest an MMF earns will fluctuate along with the market. Bottom line? MMAs make sense for savings you need to keep in a liquid, low-risk account; MMFs do not.

Though seasoned investors might not blink an eye before putting their money into an MMF, here’s another cautionary tale to illustrate how MMFs are different than MMAs. In 2008, during the subprime mortgage crisis, there was a run on MMF deposits after one such fund “broke the buck,” returning only 97 cents for each dollar invested. The panic stemmed from the fact that MMFs try to keep their share prices at one dollar with no fluctuation. Traditionally, your principal is all but guaranteed, and the only question is how much interest you’ll earn. Later studies have shown that dozens more MMFs could have broken the buck if not for regulators’ quick intervention. Though reputable MMFs are still considered very low risk, choosing an MMA that is backed by the FDIC can ease a lot of your worries.

Beginning your search

Unless you strongly believe in keeping your business local, online banks are your best bet for the highest money market rates. Money market accounts are a solid low-risk choice for stashing your money, especially if you want a competitive interest rate. As with savings accounts, just beware of minimum deposits, fees, and withdrawal limits.

Get started in your search for the best money market accounts by using our online tool, which lets you compare updated interest rates for MMAs with different opening balances.