HIGH YIELD MONEY MARKET: 10 Best Money Market Accounts

Although it comes with some disadvantages, such as low returns, a loss of purchasing power, and some money market assets that are not FDIC guaranteed, a money market account is a form of bank account that provides greater interest rates than other bank products. A High Yield Money Market account pays one of the highest rates of interest on a savings account while also allowing you to access your funds and create cheques from them. Some banks, on the other hand, label their savings accounts as “money market” accounts, despite the fact that money market accounts, unlike savings accounts, allow you to write checks. Likewise, how does it relate to money market mutual funds?

Here is why you should study this guide to the end to learn about money market accounts and how they differ from other accounts.

What is a Money Market Account?

A money market account, not to be confounded with a money market mutual funds, is an interest-bearing account at a bank or credit union. In other words, money market accounts are a form of savings deposit account offered by banks and credit unions. Also known as money market deposit accounts (MMDA), MMAs are similar to savings accounts in that they allow you to deposit and withdraw funds. Likewise, they have several unique features not seen in other forms of accounts. The funds you deposit into a money market account will also earn interest.

Generally, money market accounts often provide a greater interest rate than conventional passbook savings accounts. Also, they often come with check-writing and debit card capabilities. While money market accounts typically allow withdrawals, banks, however, may impose restrictions on withdrawals and transfers. Meanwhile, they also have limitations that limit their flexibility compared to a standard checking account. Nevertheless, they’re necessary for determining tangible net value.

Although high-rate money market accounts pay a higher interest rate than typical savings accounts, they may have higher minimum deposit and balance requirements.

How It Works

Generally, a money market account can be opened at a credit union or bank. However, they differ from other accounts in various ways. They also provide better rates, insurance, check writing, and debit card capabilities. In other words, a minimum deposit and balance are required to start a bank or credit union account. Meanwhile, a balance below the minimum may result in monthly fees.

In addition, money market accounts are offered by FDIC banks and NCUA credit unions. Nevertheless, they may have certain drawbacks. Meanwhile, just as some banks may restrict withdrawals or transfers per statement cycle, you may be able to find a higher-yielding high-yield savings account. A money market account’s minimum balance may be larger than a high-yield savings account. However, you should be able to open a money market account with no or minimal minimum amount. This is especially true online.

Furthermore, money market accounts’ check-writing ability gives flexibility and liquidity not seen in conventional savings accounts. A money market account, like a savings account, also has no maturity date and allows you to keep your money for as long as you choose. 

Read Also: HIGH YIELD SAVINGS ACCOUNT: Best High-Yield Savings Account In 2023

In other words, keep in mind that you may be forced to transact periodically to keep your account active. While this is true, security is still a major priority. However, money market accounts at FDIC-insured institutions are covered for up to $250,000. In the same way, the NCUSIF covers single ownership accounts at NCUA-insured credit unions with $250,000 worth of coverage.

In addition, the Federal Reserve directly affects money market yields. However, it’s very likely that raising the federal funds rate would make money market yields better. This is especially true for people who use online banks.

High Yield Money Market Accounts

Many financial institutions promise “high yield” money market rates. However, when it comes to real earnings, certain “high-yield” money market accounts outperform others. Nevertheless, starting with a competitive interest rate and frequent compounding, a realistic high-yield money market account ensures you’re collecting interest on your interest as quickly as possible.

As many financial experts and newspapers highlight, online banks often provide better rates on money market accounts due to lower overhead costs. (cost of maintaining branch buildings and too many staff). However, keep in mind that fees can impact your real rate of return. A “high-yield” money market account with a higher interest rate but monthly fees pays you less in the long term. Hence, the below table shows some of the high yield money market accounts in 2022;

High Yield Money Market Mutual Funds

Money market funds are a type of mutual fund. However, they are a low-risk investment vehicle with a moderate return and great liquidity. Likewise, the money market mutual funds allow you to conveniently shift cash in and out without fees or penalties.

These funds invest in high-quality, short-term assets. While they are officially investments that brokerages, investment businesses, and financial services corporations offer, they also function more like on-demand financial institution cash accounts.

Basically, money market mutual funds (MMFs) are categorized into two types:

Taxable Funds

This invests in securities such as Treasury bills and commercial journals that pay interest income that is not exempt from federal taxation. And,

Tax-exempt Funds

Specifically, engage exclusively in securities issued by state and local governments that are not subject to federal taxation.

Tax-exempt funds cater to a distinct range of investors than taxable MMFs and have enjoyed a different growth pattern. However, this is a result of their unique investing approach.

Nevertheless, the Best Money Market Funds of April 2022 are listed below:

Best High Yield Money Market Account

Money market accounts (MMAs) are a form of deposit account that falls somewhere between checking and savings accounts. They are offered by traditional banks, credit unions, and online banks. However, certain forms of withdrawals and transfers are normally limited to six per statement cycle, similar to savings accounts. You may, however, have check-writing privileges and an ATM card, just like with a checking account added advantages

Nevertheless, consider the advantages and disadvantages while choosing the best high yield money market account for your needs. Below are some things to think about while looking for the best high yield money market account:

Annual Percentage Yield

Basically, the rate at which a money market account generates interest or dividends (its APY) is among the most crucial characteristics of the account. Therefore, look for an account that pays a high APY while still meeting your other requirements.

Fees

You should avoid monthly costs, exorbitant transaction fees, as well as any other fees that can eat into your earnings.

Banking on the Internet

Considers the aspects of online and mobile banking services that you use the most. Hence, hunt for bank and credit union accounts that meet or surpass your requirements.

Minimums

Generally, the minimum deposit and balance restrictions differ from one institution to the next. In a broad sense, smaller minimal criteria make account maintenance easier. So look for a checking account with low minimums that suit your budget.

Accessibility

Generally, the way you can withdraw money from a money market account varies between banks and credit unions. As a matter of fact, some even allow you to write checks and use your debit card. Nevertheless, before you set up an account, make an inquiry regarding withdrawal possibilities as well as the bank’s excess transaction cost.

Customer Service is Important.

Make sure the bank or credit union you’re banking with has accessible customer service employees who are attentive to your requirements. As a matter of fact, take this seriously, most especially if you’re to bank at a location with restricted or limited branch accessibility.

Safety

In case of a potential bank failure, hunt for an account that has the protection of the Federal Deposit Protection Corporation (FDIC). Generally, this gives up to $250,000 in insurance per account holder, per institution, for every account owners category. At the same time, ensure that the account is equally covered by the National Credit Union Administration (NCUA) for the credit union.

Subsequently, the following are some of the best high yield money market accounts:

Conclusion

Generally, for the finest money market accounts (MMAs), rates are high, fees are minimal, and minimum criteria are reasonable. Also, in many cases, account holders can write checks or use debit cards from the account to conduct transactions. Likewise, the banks and credit unions that offer the finest MMAs have excellent online and mobile experiences, as well as customer service teams that are accessible and responsive.

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