High Yield Money Market Accounts | 3 Offers Reviewed
High yield money market accounts are a great place for your money in low rate environments like these. Although the returns are not necessarily spectacular (quite the contrary in fact), rates are competitive and FDIC insurance reduces the default risk so many other yield bearing instruments are burdened with. In addition to the risk-competitive rates on high yield money market accounts is the liquidity of the assets. This keeps your cash handy should the economy pick up and other investments begin to appear more attractive.
Rate Flexibility Keeps Up with the Joneses
Rates flex frequently (usually monthly or with changes in the Fed rates), meaning your deposits won’t fall behind if inflation picks up. Cry your heart out if you’re locked into a long term CD at these rates when the music picks up and the yields suddenly jump. I won’t be holding my breath (things being the way they are) but on the other hand it’s nice to know I can move money out into more attractive investments without an early withdrawal penalty.
Today’s Rates Low But Still Meaningful in Real Terms
A quick scan of current bank rates in high yield money market accounts indicates that most high yield online banks offer rates in the neighborhood of 1.5% on MMAs. Compare that with the average online CD (around 1.35% for 6 mo CD) and you’re looking at a minimum 15BP improvement. Some banks presently offer even better rates on their high yield money market accounts. I have summarized these in the table below (sponsor banks hyperlinked).
Table 1: Online High Yield Money Market Account Offers
| Bank | Account Name | Rate | Caveats |
| EverBank | Your Pledge Money Market Account | 1.77% | Fee on Balance < $5000 |
| Ally Bank | Money Market Account | 1.50% | None |
| HSBC | Premium Money Market Account | 0.60% | Deposit Balance > $75000 |
| Citibank | Ultimate Money Account | 1.01% | None |
| Bank of America | Growth Money Market Savings Account | 0.40-0.95% | Rate depends on balance |
| Emigrant Direct | American Dream Savings Account | 1.20% | None |
Rates Vary Widely Between Online Banks
As the table suggests there is quite a bit of variability on rates on current online high yield money market accounts. Everbank right now has the highest yield of the banks surveyed. Some banks (think Bank of America) have a wide variability on their offer rates. Quoted rates in the table for BoA were based on deposits ranging from $5000 minimum balance up to $2.5million. Yeah… I don’t know who puts $2.5million in a money market account but I suppose it happens – maybe on short term deposits on funds needed in a few days for a major project closing payment and such. Most folks would be better served dividing the money up into multiple high yield money market accounts (and thus taking advantage of the FDIC protection on the smaller accounts).
Choose Carefully – But for My Money EverBank Is Best
You may not have heard of EverBank (read our review of EverBank), however they are a strong bank based in Jacksonville Florida. While the $5000 minimum balance may be something of a turn-off for some, they still offer a NO-FEE checking account that offers a slightly lower rate (1.71% last I looked) with no minimum balance restrictions vis a vis fees.
