Money market accounts are a solid option for savers who want to see their principal earn meaningful interest with no risk. In case you’re not already familiar with money market accounts, they are a higher-interest option offered by many financial institutions. The funds they hold get invested in low-risk, short-term debt-based assets, allowing banks to pay better interest rates.
Most banks attach terms and conditions to their money market accounts, stipulating minimum daily balance requirements or restricting your ability to make withdrawals or use the funds for purchases. They are designed for saving. So, in exchange for these limitations, you will enjoy interest rates that significantly outperform even the most generous standard savings accounts.
We’ve found seven offers that stack up as the best money market rates of 2019. Take a look!
New Jersey-based Investors Bank has a pedigree dating back to 1926. It maintains more than 150 branches in the northeastern U.S.
The institution’s eAccess Money Market account offers the highest interest rate we were able to find for 2019. In fact, it pays out a handsome 2.5 percent annual interest rate with a $0 minimum deposit. Compound interest is tallied daily. This helps accelerate the growth of your deposited funds.
The only downsides are:
- The account doesn’t offer checks;
- You can’t get an ATM card for the account, and
- Unable to use funds to make a wire transfer.
Instead, customers can only move funds in and out of the account through online banking, with a limit of six withdrawals per month. The account also isn’t available to people who live in the two states — New York and New Jersey — where Investors Bank maintains physical branches.
UFB Direct offers an enticing money market account option to depositors who want debit card access and the ability to write checks. It delivers a healthy annual percentage yield of 2.45 percent, making it one of the most competitive offers on the market.
However, to take full advantage of this offer, you’ll need to maintain a minimum daily balance of $25,000. Balances below that threshold only earn interest at a 0.5 percent annualized clip. Plus, you’ll be subject to a $10 monthly fee if your balance ever dips below $5,000.
While the banking arm of insurance giant State Farm doesn’t offer physical locations, customers can open a money market account online. To open an account, you’ll have to offer up an initial deposit of at least $1,000. In exchange, you’ll enjoy a healthy 2.25 percent annual interest rate along with ATM access through the company’s extensive network. If you set up direct deposit access, your ATM fees will also be reimbursed and you’ll enjoy unlimited transactions.
If you want to take advantage of this offer, you should act promptly. It’s a limited-time promotion, with the 2.25 percent interest rate extending only to the first dozen monthly statement cycles.
Most consumers are familiar with Sallie Mae as an education lender. However, the company also offers other financial products including money market accounts.
The institution’s current 2.2 percent annual interest rate offer comes with attractive terms and conditions: no minimum balance, no fees, and no initial deposit minimums. Simply open the account and deposit what you wish to earn the rate. You can also write checks from your account.
However, Sallie Mae will limit you to a maximum of six outgoing transactions per month. The institution also doesn’t have any branches or physical locations, limiting customer service options to the telephone and online.
Formerly known as EverBank, TIAA is an excellent option for customers who want to ensure they’re always getting one of the most competitive available rates.
TIAA maintains a policy branded as the “Yield Pledge,” which promises that its money market accounts will always pay interest rates that rank in the 95th percentile or higher. Right now, that means a 2.15 percent annual percentage yield with a $5,000 minimum initial deposit.
There is one catch to carefully consider, though: the 2.15 percent introductory interest rate extends only for the first year. After the introductory period expires, your rate will fall a bit and your new offer will depend on how much you keep in the account. Balances under $10,000 get 1.1 percent, while balances from $10,000 to $24,999 get 1.2 percent. If you’re in the $50,000 to $99,999 range, you’ll get 1.75 percent. The best ongoing rate of two percent applies only to balances from $100,000 to $10,000,000.
If you’re looking for a money market account from a major financial institution with a nationwide presence, Wells Fargo has an excellent introductory offer. Deposit an initial sum of at least $25,000 and you’ll qualify for a handsome 2.05 percent annual rate for the first year.
The drawback of this offer is that it expires after 12 monthly cycles are up. At that point, the interest rate falls dramatically afterward.
Considering this drawback, Wells Fargo’s money market account is recommended only if you plan to keep your money on deposit for a year since you’ll easily be able to beat the post-promotional interest rates of 0.05 percent to 0.1 percent elsewhere.
If you have $10,000 to park in a money market account, Capital One will pay you a competitive two percent annual interest rate with negligible fees. There isn’t much fine print attached to this offer: simply meet the minimum balance requirements and you’ll qualify. The only downside is that you’ll need to use online or mobile tools to make your deposits if you don’t live near one of the bank’s Capital One Cafes, which are currently only available in 10 states.
Another consideration: the annual interest rate falls to 0.85 percent of your balance dips below $10,000. Better offers are out there for deposits in this lower range.
Before You Open a Money Market Account
Money market accounts offer an appealing opportunity to make your savings work harder, but you need to be fully aware of all terms and conditions. Financial institutions typically reserve the right to apply fees and penalties if you fail to honor your minimum daily balance requirements, exceed your withdrawal limits, or make too many outgoing transactions. It’s also common for money market accounts not to allow ATM access, debit card transactions, or check transactions. No-fee, no-minimum money market accounts usually have more restrictive terms and conditions that limit your ability to access your funds.
Prevailing wisdom suggests they function best as medium-term savings vehicles. Use them to save up for a down payment on a home, car, or other major purchase. However, if you’re looking at a time horizon of more than a few years, there are other low-risk investment options that deliver higher annual percentage yields.