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Best 5 Money Market Accounts in 2019

Last Updated: 04. June 2019
Best 5 Money Market Accounts in 2019
4.3 (86.67%) 3 vote[s]

Over the past thirty years, the US banking system has overcome major changes and improvements, to a point where in 2019 only 6.95% of Americans do not own a Bank Account.

But even with this fast expansion, it is still clear how uninformed a big of the population really is. If you were to take the time to ask in a group of 10 individuals for the differences between a checkings and savings account, chances are that less than 50% of them would be able to respond you correctly. Now imagine the same scenario where you ask the same individuals about a Money Market Account?

What is a Money Market Account? Money Market Accounts are in synthesis a more premium version of a savings account, offering more and better services and benefits in exchange of maintaining a higher minimum balance. To put it into perspective, MMA allows individuals to the same 6 monthly withdrawals like any regular savings account, but it also enable for unlimited ATM payments and withdrawals.

On the other hand of the comparison, many financial advisors match Money Market Accounts with Credit Deposits, as they both offer high yields with little associated risk and restrictions. It is important to be aware that one of the best benefits of choosing an MMA instead of a CD is that the capital will always be on call and that there won’t be any time restriction over the funds.

It is pretty common to see individual depositing here money they are saving towards a down payment, emergency funds, and even future college tuitions. In resume, an MMA is a great option to obtain higher returns over funds that won’t be needed in a short-mid period of time, without losing control and disponibility at any time.

Revenue is vanity, profit is sanity, but cash…. cash is king Unknown

Money Market Account vs Savings Account

Money Market Accounts have become more and more attractive to today’s individuals, as many consumer banking users aim for a higher return with less commitment and risk. As mentioned before, in sinthesis there aren’t many differences between both types as MMAs can even be categorized as a type of savings account.

Think about this way, a money market account is simply a better savings account, and it is intended for individuals with a higher balance.

Pros and Cons of a Money Market Account

Money Market accounts have become very popular for individuals with higher net worth and small companies, mostly because of the access to higher returns and the always constant disponibility of the funds. Just like its name describes, it is a money market and as liquid as possible!

ProsCons

  • Better Interest: Compared to more traditional types of bank accounts like checkings and savings accounts, most MMAs offer access to higher yields without adding any extra beta of risk or restriction to your funds.
  • Better Liquidity: In order to obtain a yield as high as the ones found in Money Market Accounts, chances are you would have to commit your funds in a credit deposit for at least 6 to 12 months. With a High Yield MMA, you have control at all times and you receive a yield just as high.
  • Safety: Online banking platforms had several problems in the past, from fraud to simply hacking. Nowadays with the advancement of technology, they have become impenetrable fortresses to safeguard your funds. Please note that MMAs are insured by the FDCI for up to $250,000
  • Daily Compounding: In the words of Albert Einstein, compounding is one of the most powerful forces in the universe, in the case of MMAs it allows funds to be reinvested and interests to start running over already gained interests. To understand compounding and its power better, there’s a fast exercise that you could do by calculating how much would a penny yield if doubled over a period of 30 days…. you will be amazed!
  • Better than CDs: We have talked about how liquidity make MMAs more accessible, but it is important to mention all the headaches you can avoid by having the funds available to you at all times. Rarely things in life go completely as planned, there is usually something going on differently or simple events that were not expected. If you buy a CD for a period of 6 months, and in the middle of this period of time you realize that the funds would be needed sooner than the maturity of the contract you may still ask your bank to break the CD but the penalty fees will eat your money. If you have a higher level of certainty that the funds will not be used, then there’s no problem with a CD. Unless funds are not a problem and you have other resources to take advantage of, then MMAs are the best alternatives.

  • Minimum Balance: The incentive for the bank to offer money market accounts is to capitalize at a faster pace and in return offering a higher yield. One of the main differences between regular savings accounts and MMAs is that the minimum balance and deposit is way higher. This represents a challenge for individuals with smaller accounts.
  • Limited Withdrawals:  Just like regular savings accounts, there is a regulation that limits withdrawals to only six months. Please note that as MMA offer access to plastic cards, this restriction does not take into consideration ATM withdrawals.
  • Account Closing Fees: Please be aware the even though this type of account usually looks entirely free, there are certain time requirements that need to be completed before closing an account. If for some reason you decide to close after less than 180 days, you might find yourself dealing with pretty hefty fees.
  • Inflation: One common misconception when it comes to investments or simply personal finances is that individuals believe that saving is all they need, but in reality saving without a plan or a competitive model will only result in capital degradation. Think about this way, with inflation numbers in the US of 1.9% in 2018, it means that in order for your money to at least sustain its value you need to be earning interests of at least 2% just to cover inflation.

 

Best 5 Money Market Accounts of 2019

1. Capital One 360

It is incredible to see how in such a short period of time a bank like Capital One 360 got to become such a major player in the US retail banking system. As one of the first fully online banks, the firm was able to pioneer the market and set the pace for a relatively big part of the industry.

Nowadays the bank offers access to a state of the art platform that was designed to be intuitive, powerful and with top-notch security to make sure that funds are safe at all times. It is important to mention that besides checking and savings account the company currently offers access to other types of services like commercials baking and invent investment management.

While the overall cost of owning an account is not cheap, it is worth considering as yields in all their accounts are better than most of their competitors.

After reviewing many different options in the US Market, we found out that Capital One 360 offers the overall best Money Market Account in the country. If you are in the process of opening an MMA then we suggest you take your time and review Capital One, there are other options offering a higher yield but the overall experience is not as good in the end.

Other Services offered by the bank are:

  • Checking Accounts
  • Savings Accounts
  • Auto Loans
  • Commercial Banking
  • Investment Accounts
Pros and Cons of the Bank
  • Minimum Requirements: $10,000 Minimum Balance
  • APY (Annual Percentage Yield): 2,00%

Pros

  • High-interest rates and low fees
  • Excellent money market and CD options
  • The automatic tool helps track savings goals
  • Access your money fee-free at more than 39,000 Capital One or Allpoint ATMs
  • No foreign transaction fee when you use your debit card abroad
  • Online bill pay, with an option for automatic payments
  • Deposit checks from anywhere by snapping a photo on your phone
  • The free first set of checks
  • There are two interest tiers depending on your balance. If you have $10,000 or more, you’ll receive a better rate with the Money Market than with the Savings account

Cons

  • “Opt-in” overdraft fees can be steep
  • I’ve had a hard time looking for other negatives but the overall service is superb

2. Marcus by Goldman Sachs

Marcus by Goldman Sachs was born as an online commercial bank and a subsidiary of the global brand of GS. Ever since their inception in 2016 the firm has grown considerably fast as more and more individuals in the US became interested in the perks of owning an account with an online Bank. Over the past few years, more and more banks in the US have started to spinoff online entities and Goldman Sachs developed one of the best entities with Marcus.

It is important to mention that it is a growing firm and their range of services and products is expanding constantly, even though they are fairly new in the street, the support and backing of one of the most legendary firms of WallStreet make them a hard contender and a pretty attractive option.

If all you are looking is a liquid option to access CDs and Savings accounts then you should consider Marcus as part of your account repertoire.

Other Services offered by the bank are:

  • Checking Accounts
  • High Yield CDs
  • No Penalty CDs
  • Mortgages
  • Personal Loans
  • Debt Consolidation Loans
  • Home Improvement Loans
Pros and Cons of the Bank
  • Minimum Requirements: No Minimum Balance
  • APY (Annual Percentage Yield): 2.25%

Pros

  • 2.25% annual percentage yield with a $0 minimum balance requirement
  • No minimum deposit to open an account
  • No transaction fees
  • Online banking suite

Cons

  • Limited access to mobile banking: No mobile check deposit, and (currently) no dedicated Marcus app
  • Making deposits is not friendly at all

3. Discover

One of the reasons why many consumer banks have to charge expensive fees is due to the cost associated with maintaining such a broad operation of branches around the country. In an effort to reduce costs and to offer better and cheaper services online banks like Discover have become key players in the Banking System of the country.

One of the key differentiators between discovering and their competitors is that the firms operate their own payment network which allows them to reduce the cost that is usually charged by Visa or American Express. Note that plastic cards from this firm are usually received in most commerce in the US and the world, making the firm the third largest credit card brand in the US when measured by the cards in force (50 million cardholders).

Over their 34 years of existence, the company has perfected their business model, expanding its range of services and products and becoming a key player and a strong contender for anyone looking to open a Checkings Account.

Other Services offered by the bank are:

  • Checking Accounts
  • Saving Accounts
  • Credit Cards
  • Personal Loans
  • Student Loans
  • Home Equity Loans
  • IRAs
Pros and Cons of the Bank
  • Minimum Requirements: $2,500 Minimum Balance
  • APY (Annual Percentage Yield): 1.95%

Pros

  • Competitive savings rates
  • No monthly maintenance fees
  • Large ATM network

Cons

  • Only one physical branch location
  • International use of plastic cards can be difficult as not many places accept Discover

4. Barclays

This bank does not offer many products to retail consumers in the US, but the firm has built its own name and reputation for their savings accounts and CDs, where they offer top liquidity to individuals.

With more than 48 million costumers worldwide, the London Based firm has developed a strong platform that allows individuals to managed their accounts and credit deposits in a timely and secure manner.

Individuals should be aware that the package of savings/money market products offered by Barclays are not intended for hands-on individuals, alternatively, they were designed to target individuals who do not need active management on their savings and instead will simply hold their funds for long periods of time.

If you are interested in opening an account with capital that won’t be needed in the mid/long term basis, then you should consider Barclays.

Other Services offered by the bank are:

  • Savings Accounts
  • Online Banking
  • CDs
Pros and Cons of the Bank
  • Minimum Requirements: No Minimum Balance
  • APY (Annual Percentage Yield): 2.20%

Pros

  • 2.20% APY on savings, among the best you’ll find
  • $5 nonsufficient funds fee; many banks charge $30 or more for similar fees

Cons

  • No ATM network and only 5 branch locations for U.S. customers
  • No checking account

5. BBVA Compass

Even though BBVA Compass offers a wide range of services to choose from, they are better known for their competitive yields in CDs and Money Market Accounts. It is important to mention that the firm has branches in only seven states, making it a semi-online banking model which can be a hassle if you prefer a personal and physical banking experience.

From an MMA standpoint, the service provided and overall experience is pretty similar to the average of the names from this list, it is by no means a bad service but it is also not special at all. If you re looking for competitive pricing and a mid-range platform that will not complicate your life, then BBVA Compass might be a good option to consider.

Other Services offered by the bank are:

  • Checkings
  • Savings
  • Credit Cards
  • Lending
  • Mortgages
  • Corporate Banking
  • Wealth Management
  • Retirement
Pros and Cons of the Bank
  • Minimum Requirements: $10,000 Minimum Balance
  • APY (Annual Percentage Yield): 2.0%

Pros

  • You can open a BBVA Compass checking account online and pay no monthly service charges
  • Free ATM usage as long as you use ALL TIME ATMs.
  • The BBVA Compass mobile app is bilingual and known as one of the most intuitive banking apps available
  • If you can keep an average quarterly balance of $10,000, you can eliminate the $15 monthly fee on their Money Market account

Cons

  • The rates on the ClearChoice Money Market are competitive, but the $15 per month fee reduces that return. It completely nullifies the rate on smaller account balances
  • Some savings products have a $25 “Early Account Closing Fee” if you close the account within 180 days of opening it. That’s a steep fee on an account that has an APY of only 2%

6. Pure Point Financial

Pure Point financial is the go-to option for anyone interested in getting the highest possible yield for their cash, even if it means venturing in a hybrid banking model. To give a little bit more of perspective it is important to understand that this firm defines themselves as a hybrid entity, mostly because they are not fully online and offer access to branches in major cities in the US.

The bank officially started a business in February of 2017, what many individuals does not know that is that they are in reality a subsidiary of Mitsubishi UFG (MUFG) which is the fifth largest financial group in the world. The Pure Point Financial might be a recent spinoff but just like Marcus by Goldman Sachs, its another bank venturing into online services with a strong backing.

In comparative, there are many financial institutions offering you 2,35% return on an on-call balance, this makes it a bargain and a great opportunity for any individual.

Other Services offered by the bank are:

  • Savings Accounts
  • Online Banking
  • CDs
Pros and Cons of the Bank
  • Minimum Requirements: $10,000 Minimum Balance
  • APY (Annual Percentage Yield): 2.35%

Pros

  • The savings account offers some of the highest APYs
  • Interest is compounded daily and paid monthly
  • PurePoint offers some of the nation top-yielding CDs
  • Customers in select cities have access to a financial center they can visit in person

Cons

  • PurePoint Financial does not offer a mobile app
  • It doesn’t offer checking accounts
  • The minimum to open a savings account is high
  • Early withdrawal penalty is harsh for customers with short-term CDs

Should you open a Money Market Account?

If you were to compare for the first time a Money Market Account and a Savings Account, chances are that you wouldn’t be able to find a real or major difference between the two of them. Money Market Accounts exists in a very narrow space between what a true savings account should be and the image of a credit deposit.

To put it into perspective, Money Market Accounts allow individuals to enjoy from the benefits of yields as high as a CD but with the freedom of a savings account where the funds are basically on-call and with no restriction. Once you reach the technicals of each specific account, the only major differentiator is that saving account allows individuals to sustain a lower balance than Money Market Accounts.

If you have disposable cash that is being guarded in a regular bank account, and you don’t want to commit for a specific period of time, you should consider an MMA or a High Yield Savings Accounts.

MMA:

  • Higher Yield
  • ATM access with payment services

Savings Account:

  • Lower minimum Balance

Before choosing an account over another, please take your time to understand what will be the purpose of the account and its end state. If you have more than $15,000 to allocate then maybe a Money Market option will be better, otherwise, a High Yield Savings account will do just fine and they are also more common.

Conclusion

With the high volatility levels that world is experiencing today, it is more important than ever for individuals to find and use financial instruments and vehicles that will allow for a constant return without overexposing to high levels of risk. While most sophisticated individuals and users have been enjoying the benefits of money market accounts, a big part of the population is still unaware of their existence.

I personally advise individuals to sit down with a financial advisor of their trust in order to review their personal finances for them to be advised accordingly as there are many different types of financial vehicles that could benefit you greatly. This same principle applies when selecting a bank or a financial institution, the offer is pretty broad and it is a choice that even though it can be reversed, it should not be light lightly.

Please beware that changing financial institutions will in most cases carry a final cost besides all the time it consumes. If you have enough funds to open a money market account already, I encourage you to do so as soon as possible. If you still do not reach the minimum requirements, you might want to go for high yield savings account until your funds grow enough to become eligible for a change.

FAQ

1. What is the minimum balance to maintain a Money Market Account?

Minimum balances will depend on the financial institution. While some banks offer low minimums of only $2,500 there are other top range institutions with a minimum of more than $10,000. Chances are that if you do proper research, you will find the right type of account to fit your profile and your needs.

2. Is a Money Market Account different than a Money Market Fund?

It is fairly common to see individual confusing both types of instruments. Money market funds are funds that invest in short term debt (bonds, notes, bills) of governments and corporations while a money market account is a type of savings account.

3. Are Money Market Accounts better than CDs

There are two different types of financial vehicles with two different uses, if you want to always control your account and to avoid extra penalties in case of a black swan event, then a money market account might be a better option. Please be aware that you will be restricted to owning one single type of vehicle, at the end of the day you can make all the combinations that you want, and you can also split the funds between CDs and other Accounts.

4. Is there any restriction on my money?

With money market accounts you will enjoy the same benefits as a checkings account, the funds are always going to be available for you at any time.

5. Are ATM movements consider within the 6 withdrawals a month?

No, this is one of the overall biggest benefits from money market accounts as they allow for individuals to take advantage of payment mechanisms and ATM withdrawals without limit. Please be aware that charges may incur if the balance of the account falls under the minimum requirement.

6. How much money do I have to deposit to open a Money Market Account?

Even though most financial institutions have high minimum balances in order to obtain the max level of return and APY, opening an account with most of them will only require an initial deposit of $25 (average in the industry).

This small deposit will open and activate the account but in order to unlock high yields, you will have to deposit funds to cover the minimum balance.

 

Views expressed are those of the writers only. Past performance is no guarantee of future results. Trading comes with severe risk. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Vidal Arias

Vidal is an experienced Strategist and Portfolio Manager with a keen interest and passion for the financial markets and also writing. During his career, he has developed excellent market timing skills, focusing mainly on the macro analysis of the US Equity Market and the overall US Financial Market. He started his career as a financial analyst for a major American bank and continued his way into the trading desk as a Sr. Trader and later as a Portfolio Manager for an Offshore Hedgefund in Europe. Linkedin: vidalarias Email: vidal@dojiventure.com

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