Many people wonder what to do with the money they have put aside: Invest it or keep on saving it? However – we can always do both by putting the extra cash into a money market account (MMA).
These accounts are offered by banks and credit unions and are very similar to deposits and savings accounts. However, they provide investors with higher interest rates, therefore you can generate higher yields.
MMAs tend to offer higher interest rates than savings accounts. This means that the more money you put, the more you will earn. Money market accounts work as the following:
- First, you set up an account at a bank or another financial institution
- The bank will pay you interest because you have put your money into their account; they are paying you for using your cash. The bank, consequently, will lend this money to people at an interest rate.
- You can withdraw your money whenever you want (check the section “How to manage an MMA” for more details on that)
- The bank pays you a compound interest (more details in the section “How is interest calculated)
Here are The Smart Investor Select’s picks for money market account:
TIAA Bank Yield Pledge® Money Market
The high minimum requirement for some of the accounts gives depositors an advantage. The bank stays true to its promise to give APYs that are among the 5% of the highest in the industry.
The Yield Pledge Money Market account is above average product when you place it side-by-side with other banks’ money market account.
We like the bank because it offers a wide range of products from checking and savings accounts, to CDs, money market and credit cards. They also have loan products and investment accounts. It’s good to have a bank that can provide the full array of common bank products that a typical customer might need. One does not have to open another account in another bank just because it’s not available in your primary bank.
This account is for people who have some funds they can deposit for a time but do not know exactly when they will need them. The money market accounts let them earn interest for their money while giving them the flexibility to withdraw their money any time should it be necessary.
Synchrony Bank’s APY for money market is still above the national average so this is another benefit for the customers.
Also, there is no minimum balance requirement for this account which is good for those who are just starting out on their saving journey.
Discover Bank Money Market Account
A money market account takes your earning power from your savings account and gives you access to your checking features for an increased versatile account. Discover offers money market accounts that provide you with ATM access, debit card, and check-writing capabilities.
When using your money market accounts you can rely upon the highly effective and convenient service Discover Bank provides. There is high earning potential within the Discover banking system. If your account is under $100,000 you earn 0.55% APY and with a balance of over $100,000 you earn 0.60% APY.
If your account balance is $20,000 saved for five years, you will earn $110 the first year and $558 over five years of saving.
Overall, Discover’s money market accounts have no fees and no minimum balance requirements. This allows you to earn more interest than you would from a traditional checking account, which makes this a great opportunity to grow and expand your financial portfolio without taking too big a risk.
The Ally Money Market account offers tiered interest rates that change based on your minimum daily balance. There are free checks and debit cards provided with a money market account, which differs from the savings account service. The money market account does not offer as high an APY that the savings account has.
The money market account offers many ways for you to grow and access your money. You should be aware that the money market accounts offered through Ally are less than twice the APYs available with other accounts. This means you could find more reasonable and financially incentive money market accounts compared to Ally.
There are many great aspects to having an Ally Bank money market account. Their APY is more than 4 times the average money market account rate, which is a great indicator of financial growth and stability. You are also reimbursed up to $10 per statement cycle for any fees at non-Allpoint ATMs, which is a great program when you are traveling.