A money market account is essentially a savings account that may offer a debit card and some checkwriting privileges, but also gives you a higher interest rate than traditional savings accounts, and typically much more than a checking account will. If you’re interested in a money market account, there are plenty of them out there. Here’s how you can compare accounts and understand which will be the highest paying money market accounts.
1. APY
APY, which stands for Average Percentage Yield, is how much interest your money will earn in a money market account. APY is important to look at, but mostly in relation to other APY. Depending on inflation and current economic factors, your APY will change, so it’s important to see what a specific money market account offers in relation to other accounts, not in absolute terms.
2. Monthly Fees
It’s very common for money market accounts to charge monthly fees unless you have an account balance above a specific minimum. That minimum may be fairly high, often in excess of $5,000 in an account. It’s a good idea to calculate how much you’ll be getting in interest versus how much you’ll pay for the monthly fee. If you’re getting 1% in interest and the monthly fee is $10, you’ll want at least $1,000 in the account to offset the monthly fee.
3. Minimum Balance and Most Ideal Balance
Most money market accounts have a minimum balance requirement and a minimum starting deposit requirement, although depending on the bank, those requirements may be extremely low. You can find banks that only require a $5 starting deposit, though other banks may have a starting deposit of $100 or more. It’s also important to look at when the best benefits will kick in, as some accounts will reward you further for having $50,000 or $100,000 in an account.
4. Extra Features
Are there any extra features available in your money market account? Most money market accounts allow you to access your account on a mobile app, but you may also be able to send money with tools like Zelle and PayPal. It’s also important to see how often an account compounds your interest, whether it’s daily or monthly, as the ramifications for your money will be different depending on the compounding type. These are the things that can help you decide between two money market accounts that you’re equally interested in.
Conclusion
Comparing different money market accounts can be complicated, especially if you’ve never had a money market account before. If you’re interested in starting to make more money with the money you have, but you don’t want to take the risks that may be part of investing your money, a money market account can be the perfect way to do just that. As long as you look at these four important aspects of money market accounts, you’ll be able to compare the money market accounts that you might be interested in.
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