Best Money Market Accounts
Money market accounts appear attractive to unadventurous savers due to the higher returns that such accounts offer as well as increased liquidity as compared to CODs (Certificates of Deposits). Such accounts however come with its own cons such as variable interest rates, high minimum balance requirements, and restrictions on the level of liquidity.
Individuals who have made a decision that money market accounts are ideal for their businesses or personal finances should search for the best deals. Some of the best jumbo, business, and personal money market accounts as per the APY are mentioned below.
One of the important things to remember about the liquidity of money market accounts is the Federal Reserve Board’s Reg D (Regulation D) rule which restricts the account holders to just 6 withdrawals each statement period across multiple transaction processes such as fees levied by financial institutions, closure of the account in case the limit is exceeded, and conversion of the money market account into a checking account. The regulation is valid for all money market accounts, but the fees levied may vary from one institution to another.
Process of selection of the best money market accounts
The below mentioned list of the best money market accounts was compiled after comparison of the APY (annual percentage yield) of 3 categories of money market accounts available nationwide, namely, personal, jumbo, and business money market accounts. Credit unions with excessively restrictive requirements for membership as well as institutions with a health grade below B rating were not included.
Then, within each category, the money market accounts with the best APY were selected. In case the APY of the top money market accounts was the same then the tie was broken via selection of the institution that had least volatility in the history of its rate. It may be noted that accounts that have a history of fluctuating rates are not better than those with a steady rate. The money market accounts thus chosen also had to have insurance of up to $250,000 by the NCUA/National Credit Union Administration or the FDIC/Federal Deposit Insurance Corp.
Savings accounts vs. Money Market accounts
Both savings accounts and money market accounts are controlled by Reg D transfer and withdrawal limits, and each may offer debit card choices depending on the institution/bank that has the account. Also, there is not much distinction with regards to access of the holder to the money in the each type of account. Thus, the major difference is in the interest rates.
In the past, money market accounts usually offered higher rates of interest as compared to bank savings accounts. This may not hold true now. The top online savings accounts may offer APY that is sometimes equivalent to the APY offered by money market accounts, if not more.
Money market funds vs. Money market accounts
Money market accounts are completely different from money market funds. The former has NCUA or FDIC insurance while the latter does not. People may invest in money market funds as they potentially offer increased returns, but such funds also carry the risk of increased losses.