You probably have a checking account, but when you need to park larger amounts of money somewhere, you may prefer the relatively high interest rate a money market account can offer. Most of these savings accounts let you write a handful of checks every month, so you can use them for big purchases. A few even provide debit cards.
Here’s a roundup of the best-in-show high yield online money market accounts:
Best for a high interest rate: ableBanking Money Market Account
1% annual percentage yield (APY)
Aside from the top-notch APY, the most unusual thing about ableBanking is its commitment to charity. The bank donates $25 to any charitable 501(c)3 organization of your choice when you open an account, and another $25 when you refer a friend who opens an ableBanking account. You can also send money directly from your account to a charity for free.
There’s no monthly account fee, but there are no check-writing privileges, either. You can transfer funds electronically to and from your accounts at other banks. Receiving an incoming wire transfer of cash is free, but sending a transfer costs $20.
It would be nice if the bank’s website were a little easier to navigate, but it does offer a live chat service with a bank representative. If the best possible interest rate paired with low fees is what you’re after, ableBanking is a winner.
|Two important features of money market accounts|
|They’re insured by the FDIC. Don’t mix them up with money market funds, which are an investment product. Those are not insured, but money market accounts at banks and credit unions are insured up to $250,000, just like regular savings accounts.|
|Withdrawals are limited. Federal law prohibits more than six withdrawals a month using online transfers, checks or even point of sale transactions. If you go over the limit, most banks charge a fee, at least the first couple of times. If you do it more than twice in a 12-month period, your bank may close your account or convert it to a non-interest-bearing account, to avoid running afoul of the rules.|
Best for ATM access: Ally Bank Money Market Account
Unlimited ATM withdrawals
The interest rate isn’t too shabby, either. At an APY of 0.85%, it’s more than 10 times the national average reported by the FDIC.
Customers can deposit checks with Midvale, Utah-based Ally’s eCheck Deposit feature using its mobile banking app — up to an impressive $50,000 a day, a much higher limit than most banks impose. There’s no minimum opening deposit, and no monthly account maintenance fee. ATM withdrawals are free at over 43,000 Allpoint ATMs, and Ally will reimburse up to $10 per statement cycle for fees incurred at out-of-network cash machines.
If you want regular access to your savings using an ATM and don’t want to sacrifice too much interest to get it, Ally might be the bank for you.
Best interest rate longevity: EverBank Yield Pledge Money Market
Rate guaranteed to stay in the top 5% offered by competitors
Interest rates can change any time. But some people choose a bank because it has good rates. Bankers know that perfectly well and will make every effort to keep their deposit rates high so they can retain their rate-chasing customers. It’s still nice to have that in writing.
With rates so low across the board, promising to stay in the top 5% isn’t saying much. But it’s still nice to know that the rates won’t drop precipitously after you’ve opened an account.
Currently, EverBank offers an introductory bonus rate of 1.4% for the first six months for new accounts, and 0.61% after that. The account comes with a debit or ATM card, and for those with a balance above $5,000, the bank will cover fees charged by out-of-network ATMs.
If you’d trade a guarantee of solidly competitive returns for a slightly higher rate that could drop overnight, EverBank might be just what you need.
Best checking features: Bank of Internet USA Money Market Savings Account
Checks, online bill payment and a debit card
First there’s check-writing abilities — the bank provides the first set of checks for free — and then there’s the debit card it provides as well as online bill payment services. The accounts offer a few other unusual perks, too, like providing postage-paid envelopes for deposits by mail. If you need to make more withdrawals than are permitted by law, there’s an option to convert to another account type that doesn’t have those restrictions.
Bank of Internet, based in San Diego, offers an impressive array of online and mobile banking tools. In the online category, that includes FinanceWorks, which helps users track all their accounts, even those with other institutions. Mobile app features run the gamut, including check deposits and fund transfers between EverBank accounts.
If you want a true hybrid with many features of a checking account, Bank of Internet’s Money Market Savings Account may be a good choice.
Best for high balances: iGObanking’s iGOmoneymarket
The account comes with a debit card but no check-writing privileges. Depositors can set up automatic transfers from the account into a checking account though.
This is a bare-bones money market with one of the highest interest rates around and a minimum balance requirement below the jumbo level. If you have a nice chunk of change and you want to earn the best possible return without locking money into a long-term certificate of deposit or giving up the security of FDIC insurance, the iGOmoneymarket can be a great option.
Why open a money market account
It’s probably not worth it to open a money market savings account if you don’t plan to keep very much money in it. But if you have a sizable emergency fund or you’re saving for a big expense like a down payment on a home, earning more interest than a typical savings account provides isn’t a bad thing.
The monthly withdrawal limits may also be more of a help than a hindrance — after all, if you’re saving up for something you may welcome the hurdles to raiding the account willy-nilly. Look for an account with low fees, high interest and a smooth procedure to link it up with other accounts. Then sit back and watch the interest roll in.
Updated July 31, 2015.
Image via iStock.