For a long time, banks offered only two types of accounts: checks and savings. If you want to earn interest, you have to rely on long-term savings accounts. Today there are many options, including CDs and money market accounts. The latter is a hybrid between a savings account and a checking account: it allows you to write only a limited number of checks each month or make limited debit purchases, but your money will earn more interest than it does. ‘with a savings account. You must first research the best returns in the money market before opening an account.
And you will find the best returns if you put your money in an online bank. If you stick with a traditional bank, you’ll get A LOT LESS than a 1% rate on deposits under $ 100,000. With online banking, you could get at least 1%.
Note: Whatever you do, don’t confuse money market accounts with money market funds. The latter is a type of investment fund that is not supported by the FDIC. It might interest you at some point, but for the lowest level of risk possible, it’s best to stick with an online bank that offers the best money market returns.
You will likely need to maintain a minimum balance, which varies from bank to bank. You will also need to keep this balance in the account at all times (according to the agreed term) in order to avoid charges and continue to earn a good return.
The best money market returns don’t require a monthly fee
You should NOT have to pay monthly maintenance or service charges. Cross out any bank that tries to charge you these fees. This is why you should take the time to read the terms and conditions, although they can be tedious.
There will most likely be a penalty fee if you drop below the minimum required balance, so only put money that you are absolutely sure you won’t be drawing for at least a year.
Here are some of the banks that currently offer the best money market returns (be sure to research each one individually and read the terms and conditions):
• TIAA Bank – introductory rate of 1.85%
• eAccess investors – 1.75% APY
• Sallie Mae – 1.75% APY
• CIT Bank – 1.85% APY (only $ 100 of memory required)
Overall, CIT Bank is probably your safest bet for the better money market returns. You will get a high APY regardless of the balance. There are no maintenance fees to worry about either, and your money is FDIC secured.