Finding the Best Money Market Accounts
Once you've decided to invest your savings in a money market account, how do you select the best account to open? You might choose a money market account based on the interest rate, fees or restrictions, the institution's customer service, or a likely a combination of these.
Here's what you shouldn't do: Find any bank that seems OK, open the account and call it a day.
That's because a few more keystrokes now to do some basic research could mean a lot more green in your wallet later. With up-to-date bank listings at MoneyMarketAccounts.com, you can compare the best money market accounts side by side to find the highest interest rates at reputable banks.
With the best money market accounts, watch your dollars grow
Though the best money market accounts that fit your banking needs may not necessarily be the ones offering the highest money market rates, chances are that's what you care about most.
Should you look for the highest interest rate, or the highest annual percentage yield (APY)? The interest rate is the straight annual percentage that you receive based on your money market account balance. However, banks compound interest payments at different frequencies. The APY is a number that takes that compounding schedule into account--the effective annual interest rate if you didn't withdraw any money along the way.
If two banks are offering the same interest rate but one has a higher APY, that bank is compounding your money market account balance more frequently. That translates to more cash for you.
The case for finding the highest money market rates
Is it really worth comparing rates to find the highest money market rates? What's the harm in losing a fraction of a percent? Quite a bit, as it turns out. Not searching for the highest money market rates is literally leaving money on the table.
Here's an example. Let's say you open a money market account with a $50,000 balance.
- With 1 percent interest compounded monthly, in five years your money will have grown to $52,562.
- With 1.3 percent interest compounded monthly, that same pot will have grown to $53,356.
Blowing off what seems like a measly 0.3 percentage point yield is like throwing away $794 over five years. Don't regret having bypassed the highest money market rates. It's quick and simple to compare the best money market accounts online.