Banking

Best Money Market Accounts (2024)

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A money market account is an interest-bearing deposit account offered by financial institutions, blending features of savings and checking accounts. These typically provide higher interest rates than regular savings accounts, with variable rates influenced by market conditions. They offer liquidity, allowing relatively easy access to funds and often include check-writing privileges. 

Some money market accounts may have minimum balance requirements, though they are typically insured by the Federal Deposit Insurance Corporation (FDIC) up to a certain limit. While providing a balance of liquidity and higher interest rates, they may also have limitations on withdrawals and returns compared to more aggressive investment options like stocks or mutual funds. 

One of the most noteworthy choices in the scene is the CIT Bank Money Market Account, owing to its competitive annual percentage yield (APY) and zero monthly maintenance fees, among other things. On the other hand, there’s the online platform Raisin. While it isn’t a bank itself, it facilitates access to various money market accounts from numerous banks, allowing individuals to compare and choose the best option for their needs.

CIT Bank Money Market Account

The CIT Bank Money Market Account offers a standout option for savers seeking impressive returns, touting a 1.55% APY rate that’s over twice the national average. With its emphasis on accessibility, account holders enjoy quick and easy access to their funds.

Moreover, users don’t have to worry about monthly service fees either, giving them the opportunity to simply focus on growing their funds. The account provides peace of mind as well, with 24/7 secure banking and FDIC insurance of up to $250,000 per depositor in the event of a bank failure. Also, its mobile app facilitates convenient check deposits and transfers, enhancing the overall banking experience.

All in all, CIT Bank’s Money Market Account delivers on its promises of competitive rates, accessibility and security, making it a top choice for individuals looking to optimize their savings. However, it’s worth noting that CIT Bank doesn’t have physical branches, as it’s online only, and linking a debit card to and writing a check on the Money Market Account aren’t supported.

Raisin

Raisin operates as a financial marketplace of sorts, serving as an intermediary to facilitate connections between users and an extensive array of savings and investment offerings across multiple banks.

Although the company doesn’t offer its own money market account, it serves as a conduit, enabling users to access a diverse range of products. Essentially, its platform gives users the opportunity to freely compare various savings accounts to get the best option for them. What’s more, customers may even get better interest rates through Raisin than if they were to directly register at a specific bank’s website.

For example, the money market account on Ponce Bank’s website has a maximum APY of 0.20% for balances of $50,000 or above. Meanwhile, signing up for Ponce Bank’s money market deposit account on Raisin will let customers earn a higher return with an 5.28% APY (at the time of writing).

Is it good to keep money in a money market account?

Keeping money in a money market account can be a wise choice for individuals seeking a balance between liquidity, safety and modest returns. Here’s a list of the advantages this type of account can offer:

Higher Interest Rates: Money market accounts typically have higher interest rates compared to traditional savings accounts, allowing your money to grow more quickly.

Liquidity: While money market accounts offer higher interest rates, they still provide easy access to your funds, making them a suitable option for emergency savings or short-term goals.

Safety: Money market accounts are typically FDIC-insured up to certain limits, providing a level of safety and security for your deposited funds.

Check-Writing Privileges: Many money market accounts offer check-writing privileges, providing additional flexibility in accessing your funds for various expenses.

No Market Risk: Unlike investments in stocks or mutual funds, money market accounts are not subject to market fluctuations, offering stability in returns.

Can money market accounts lose money?

Money market accounts are designed to be relatively safe investment vehicles, but they are not completely risk-free. While it’s uncommon, it is possible for money market accounts to lose value under certain circumstances. Here are a few scenarios where this might occur:

Interest Rate Risk: Money market accounts invest in short-term, low-risk securities like Treasury bills, certificates of deposit and commercial paper. If interest rates rise significantly, the value of these securities may decrease, potentially causing a decline in the account’s yield.

Credit Risk: Although money market accounts typically invest in highly rated and low-risk securities, there is still a small risk of default by the issuer. If one of the securities held in the account defaults, it could lead to a loss of principal.

Inflation Risk: Money market accounts may struggle to keep pace with inflation, particularly during periods of high inflation. If the interest earned on the account fails to outpace the rate of inflation, the purchasing power of the funds deposited in the account may decrease over time.

While the likelihood of significant losses in a money market account is low compared to riskier investments, it’s essential to be aware of these potential risks and consider them when making financial decisions. Additionally, money market accounts are typically FDIC-insured, providing protection for deposited funds up to a certain limit, which mitigates some of the risk.

Verdict

When considering the best money market accounts, it’s hard to go wrong with the CIT Bank Money Market Account. After all, it offers a competitive APY and user-friendly features such as its mobile app that provides the ability for transfers and check deposits.

In contrast, Raisin’s platform serves as a versatile intermediary, connecting users with a multitude of savings options from various partner banks and credit unions. Needless to say, this allows customers to find the ideal bank to sign up with that offers a high APY and agreeable terms.