For the longest time, banks only offered two types of accounts: checking and savings. If you wanted to earn interest, you’d have to rely on long-term savings accounts. Today, there are numerous options, including CDs and money market accounts. The latter is a hybrid between a savings and a checking account: it allows you to write only a limited number of checks each month or make limited debit purchases, yet your money will earn higher interest than with a savings account. You should first search for the best money market returns before starting an account.
And you’ll find the best returns if you put your money in an online bank. If you stick to a traditional bank, you’ll get FAR LESS than a 1% rate on deposits less than $100,000. With an online bank, you could get at least 1%.
Note: Whatever you do, don’t mistake money market accounts with money market funds. The latter is a type of investment fund that isn’t backed by the FDIC. It might be something you are interested in at some point, but for the lowest amount of risk possible, it’s best to stick with an online bank that offers the best money market returns.
You’ll likely be required to maintain a minimum balance, which varies from one bank to the next. You will also be expected to keep that certain balance in the account at all times (on the agreed upon duration) in order to avoid fees and continue getting a good return.
Best Money Market Returns Do Not Require Monthly Fees
You should NOT have to pay any monthly maintenance or service fees. Strike out any bank that will try to charge you for those. This is why you should take the time to read the terms and conditions, even though they can be tedious.
There will most likely be a penalty fee if you go below the minimum balance requirement, so only put money in that you will be absolutely sure that you won’t be dipping into for at least a year.
Here are some of the banks that are offering the best money market returns right now (just remember to research each individually and read the terms and conditions):
• State Farm – 0.50% (under $4,999) / 1.01% $4,999 and up
• TIAA Bank – 1.85% introductory rate
• Investors eAccess – 1.75% APY
• Sallie Mae – 1.75% APY
• CIT Bank – 1.85% APY (only $100 memory required)
Overall, CIT Bank is probably your safest bet for the best money market returns. You’ll get a high APY regardless of the balance. There are no maintenance fees to worry about either, and your money is secured by the FDIC.