If you have used a traditional brick and mortar bank, chances are the tellers have spoken to you about money market accounts. Despite how popular these accounts are, there is still a great deal of confusion surrounding them.
Money market accounts present a few benefits and can fit nicely into your financial plan. This article will elaborate on how money market accounts work and which ones are the best.
What Is a Money Market Account and How Does It Work?
A money market account is a hybrid between a traditional savings and traditional checking account. Money market accounts can be linked to a debit card, and the account owner can write checks against this account.
They typically offer greater interest rates than a regular savings account — which makes them an attractive option. However, the gap between money market accounts’ and traditional savings’ interest rates has narrowed in recent years.
Are Money Market Accounts Insured?
If the bank is FDIC insured, the money market accounts they provide will also be insured up to $250,000. However, if you want to deposit more than $250,000 in a money market account, it’s suggested to spread your money across a few different banks. Since it would allow you to have your entire lump sum of cash fully insured.
How To Choose a Money Market Account
Finding the right money market account is important. Some people are more comfortable banking at traditional brick and mortar banks, whereas others are comfortable banking fully online. Each bank offers a slightly different money market account.
Generally speaking, most people chose a money market account based on:
- Interest rates
- Minimum account balances and monthly fees
The 6 Best Money Market Accounts
We’ve canvased the land in quest of finding the best money market accounts. Below is our concise list.
Axos Bank is known for being a leader in the industry when it comes to leveraging technology. Their money market accounts are some of the best around. Not only are their interest rates among the highest, their platform is easy to use and convenient.
Banking with Axos Bank provides numerous benefits. Many of Axos’s customers rave about the convenience of this bank. They offer a long list of options such as checking accounts, savings accounts, CDs, small business banking, investing options, and even mortgages. It is truly you’re one stop shop for all your online banking needs.
Connexus Credit Union
Connexus Credit Union is known for having “access and growth all in one account.” For money market accounts with a $50,000+ balance, you can earn around 500% more in annual percent yield (APY).
The national average is around 0.17% APY on money market accounts whereas Connexus offers rates as high as 1%! You can book an appointment online to see if you can get set up a Connexus money market account.
Sallie Mae Bank
Sallie Mae Bank was voted in 2020 as one of the best money market accounts. This bank provides an attractive interest rate, 0.40%, which is close to 2.5x the national average.
Additionally, there is no minimum balance and no monthly maintenance fees! Their customer service hours are from 8am – 8pm EST Monday through Friday which is incredibly convenient. If you have questions about their money market account, visit their website or contact them at 877-346-2756.
NBKC has an A+ rating with the Better Business Bureau and is well respected for their money market accounts. Although this bank is stationed in Kansas City, you can sign up online and access your money any time!
NBKC combines a checking account and a savings account into one and calls it “The Everything Account.” This specific account earns a 0.25% APY on everything! There are no account fees or fine print with this bank – what you see is what you get which is why NBKC is highly favored.
Ally Bank is a full service online bank. One of the benefits of fully online banks is that it doesn’t spend a lot of money on real estate. Therefore, the bank is able to offer their customers lower account fees, and higher interest rates on their various accounts. Ally Bank does just that.
Their money market account offers 0.50% APY on all balance tiers. Not only does Ally Bank provide higher than normal interest rate, they also don’t charge their customers with a monthly maintenance fee.
First Internet Bank
Last, but not least, is First Internet Bank. Similar to Ally, this bank is fully online. You can open an account from the comfort of your own home in just minutes. Additionally, the APY is 0.5%, which is more than the national average.
However, this bank does have a $5 maintenance fee, but if you have an average daily balance of $4,000 or more, that fee is waived. They will also reimburse you up to $10/per month for fees you incurred at an ATM.
One Tool in the Toolbox
A money market account has many benefits. Your money can be accessed at any time and also earns a greater interest rate than a traditional checking or savings account. Money market accounts are also insured up to $250,000, so there is no risk of losing your money.
Despite all the benefits, by no means is a money market account designed to help you reach financial freedom or provide you with passive income in your retirement years. It’s simply one piece to the complex financial management puzzle.
Consulting with a financial advisor is the best way you can reach your financial goals. Financial advisors exist to take survey of your current financial situation and your desired financial situation. They understand various financial instruments and know which ones are best suited for you based on your goals.
Working with a financial advisor will not only help you reach your financial goals, but they will also help answer your questions about investing or financial management.