To understand what money market accounts are, one must first understand what the money market is. For the uninitiated – the money market, in broad terms, refers to the trading of short-term loans which occur between financial institutions such as banks. Short-term, in this sense, refers to loans who’s terms span over the course of a year at most, though often-times much less. Money market loans can be as short as several days.
Money market securities consist of such securities as municipal notes, federal funds and treasury bills among other things. Despite its small stature relative to the financial market as a whole, the money market is quite versatile in that it can be a great tool for companies trying to raise money quickly as well as investors looking for a short-term parking space for their cash.
Money market accounts are accounts which pay their holders interest rates – rates which are entirely dependent on current money market interest rates. You can’t cash out on this portion of the financial market without a money market account. Money market accounts are great for those who are interested in low-risk, short-term, liquid investments and should be sought after by any short-term investor.
1. Ally Bank – 5/5 Stars
The Ally Bank Market Account is one of the more popular money market accounts. There are many reasons for this, the main one being that it is a good place for any new investors to start (and end, if you ask me). It’s got relaxed withdrawal limits, easy access, you name it. What I’m trying to say here is that it’s easy for new and old investors alike.
I’ll start by listing what sets it apart from other money market accounts. For starters, it has a great interest rate, and by great interest rate, I mean .85% APY. For those who don’t know, this is really, really good considering all of the perks and low fees which come with this account. Perhaps it’s not the best interest rate in the business, but it’s pretty darn close – I’d wager it’s in the top five. It also has unlimited ATM withdrawals, which is a nice added bonus. It also comes with check writing and mobile check deposit. These terms alone make this account great for any investor.
If you’re not just any investor, but rather a new investor, Ally Bank has you covered as well. The terms and conditions with Ally Bank are extremely legible – assuming you take the time to read them, you won’t face any surprises down the road – this is my favorite part. It may not sound like a big deal, but for new investors, it is a huge deal. You need to know what you’re doing when dealing with the money market and money market accounts. That’s not going to happen if you can’t even understand the terms and conditions.
Ally Bank is simply the best money market account for both new investors and experienced investors alike.
2. EverBank Yield Pledge – 4.5/5 Stars
The EverBank Yield Pledge account is great for far-sighted investors. While it offers a great interest rate at this particular moment, it promises to remain in the top 20th of all money market account in terms of APY. It also comes with some pretty good perks, which really pale in comparison to its long-term APY promise.
Look, we can argue about who has the best interest rate on the market right now, but that won’t mean anything ten years from now. No matter what this money market account’s current APY is in relation to other high-end accounts of its type (which happens to be quite high, I might add), the promise to remain in the top 20th of all APYs makes this account great for long-term investors. Its other perks include fee-free positive balances, mobile check deposits and check writing, which only add to its value.
3. Bank Of Internet USA – 4/5 Stars
A lesser known financial institution, the Bank of Internet USA charges a flat rate to open an account and has a modest interest rate, though it allows its users more freedom than what can be achieved through many other money market accounts.
It costs $100 to open an account with these guys, which can come across as daunting to some. Its .75% APY isn’t the greatest either (although it certainly isn’t bad). What makes this account great is its lack of fees, outside of the initial $100 of coarse. It has no monthly service fees and actually offers a service to pay bills. For the responsible low-key investor, the lack of monthly fees should be very attractive.
4. ableBanking Money Market Savings – 4/5 Stars
This ableBanking account is easy and simple. It has some fees, though it has an attractive interest rate which should appeal to all investors.
When signing up, new account holders are given the opportunity to donate $25 to the charity of their choice at the expense of the institution. While not the first thing on everyone’s mind, it’s nice to see some social responsibility on the institution’s behalf. Its current ABY clocks in at over 1%, making it great for those simply focused on returns. Its $250 minimum when opening an account; however, may be a burden to some, though it has the potential to pay for itself quite quickly.
5. Capital One 360 – 3.5/5
If you’re just looking for something simple, Capital One 360 is the account for you. It’s great for casual investors or those simply looking to get their feet wet. Why? Because it has a pretty average APY (.75% to be exact) and no minimum balance requirement to cash out on your interest rate. It also gives users a bonus – to the tune of up to $500 – for signing up. How cool is that?
It’s worth noting; however, that the Capital One 360 comes with next to no perks. If you don’t mind paying extra fees for extra convenience, you may be better off with another account.
Choose your account wisely. Everyone has different needs and their is no one best account for everyone. It really all comes down to your priorities. Want to invest as little as $100? Great! Just make sure to get an account with no minimum balance with low fees (otherwise your interest won’t even cover them – really, this happens). It’s generally accepted that, aside from a few exceptions, accounts with higher interest rates come with less perks, otherwise there would be one best account for everybody. In the end, your priorities are your priorities. Choose wisely!