More Flexibility, Same Solid Rates
TL;DR
Money market accounts offer high yields, FDIC insurance and better access to your funds. Here’s why you should have one.
In our third and final installment of July’s independence-themed issues, we’ve got more motivation for you to get your money out of your stagnant brick-and-mortar bank accounts.
Two weeks ago we talked about why your bank sucks and why you should move your savings to an FDIC-insured online high-yield account. Last week, we talked about taking advantage of still-high APYs on short-term CDs and Treasury bills before the Fed cuts its benchmark interest rate.
By the way, after the most recent Consumer Price Index reading showing inflation now down to 3.3% … it’s looking increasingly likely that those cuts will happen at the September FOMC meeting.
According to the CME Group’s FedWatch Tool, there’s a 93.3% the Fed holds rates steady at the July 31 FOMC meeting. But for its following meeting in September, there is currently a 94.4% expectation that the central bank finally cuts rates.
So today — before we get back to recommending a new stock next week — we’re doing a quick rundown of money market accounts, and why you might want to consider them over high-yield savings accounts, CDs or Treasury bills.
Why a Money Market Account?
Yes, last week we discussed how short-term CDs and Treasury bills carry fixed rates, meaning if you don’t need immediate access to your money, they make sense.
But when it comes to money market accounts and high-yield savings accounts — both of which carry variable APYs — there’s a slight edge to the former for people who need to use funds in those accounts on a recurring basis.
Think of money market accounts (NOT to be confused with money market funds) as higher-yield checking accounts. That’s because they issue customers debit cards and/or checks so you can use the account for expenses.
And while these types of accounts sometimes carry higher minimum balance requirements than high-yield savings accounts (and typically have marginally lower APYs), for people looking to entirely vacate brick-and-mortar banks, this could be the one-size-fits-all solution.
3 Best Current Money Market Account Rates
Western Alliance Bank is coming in tops this week with its 5.31% APY. However, to take advantage of the best offer, you’ll need to maintain a $2,500 balance to avoid its monthly $10 service charge.
Jenius Bank’s money market account is offering 5.25% APY, which is 11x the national average and it comes with no fees and no minimum balance requirements.
Bask Bank’s money market account offering 5.10% APY is currently the third-best rate available. No minimums, no fees.
We’ll be back in your inboxes next Monday with a stock that every retail investor should be thinking about.
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