How to Find the Best Money Market Rates

If you want to keep some cash on the sidelines or in an emergency fund you might as well get the best possible return on your money. Here are some tips on getting the best money market rates.

Aug 17, 2014 at 2:14PM

Source: Flickr user 401(k) 2013.

With the stock market fairly expensive by historical standards, it may make sense to keep some of your money in "cash." This doesn't mean stuffing $100 bills under your mattress, but rather having a portion of your investment portfolio in safe, readily accessible places such as a money market account.

The problem is that money market interest rates can be downright depressing. According to Bankrate, the national average for money market interest rates is a paltry 0.1%, and many of the big banks pay even less than that.

While you're not going to get rich with a money market account, you can achieve better returns than that. With a little homework, you should be able to keep some cash handy while earning a return many times greater than the national average. So why should you use a money market account for your cash, and how do you find the best money market rates?

Why a money market account for your cash?

Money market accounts are a way to save money while receiving some of the benefits of both savings accounts and checking accounts.

Interest rates are generally better with money market accounts than with savings accounts. Banks can offer those rates by typically requiring a higher minimum balance than they do for a savings account and by limiting the number of withdrawals allowed. Federal law limits money market account holders to six withdrawals per month, including checks and transfers but not including ATM withdrawals.

Like a checking account, money market accounts usually allow check-writing ability and a debit card. The limit on withdrawal transactions can make money market accounts slightly less liquid than checking accounts, but still gives you on-demand access to your cash savings.

Just like checking and savings accounts, money market accounts are insured by the FDIC, making them one of the best choices for a truly safe place to keep your savings.

For the best money market rates, look to the Web

While virtually any money market account will come with a better interest rate than you'll find on a savings account from the same bank, rates can vary tremendously from bank to bank. And the best rates are usually offered by Internet-based banks.

A quick search on shows rates of nearly 1% from some institutions. I know 1% is not the type of long-term return you want from your investments, but for cash that's just sitting there, it's far better than nothing -- or next to nothing, which most banks pay. On a $25,000 money market account, this could mean $250 in extra money each year.

For example, Ally Bank offers a money market account paying a 0.85% APR as of this writing. In addition, there is no minimum balance requirement (rare for money market accounts), and the fees are remarkably low. Ally charges just $9 for an overdraft and just $10 if you make too many withdrawals.

There are many other exceptional rates and terms out there; check out what's currently available over at Bankrate. If you have a large amount of cash to deposit -- say, $25,000 or more -- you may qualify for an even higher interest rate from some banks.

Other things to consider

A high interest rate is nice, but it doesn't tell the entire story. Other factors to consider are minimum balance requirements, the potential for fees, convenience, and customer service.

Make sure the minimum balance requirement for the account you choose gives you sufficient "wiggle room" so that if you need to access some of your money you won't fall below the minimum, which can trigger fees. Look into how much it will cost you if you fall below the minimum balance or make too many withdrawals in a month.

Also keep in mind that numbers aren't everything. If you think you'll need ready access to your money on a regular basis, make sure the institution you choose offers a convenient way to withdraw cash. National banks have thousands of branches and ATMs, while local credit unions and Internet-based banks could have very limited options.

Customer service is also something to consider. Generally, you'll get more personal service from local banks, while the national banks vary greatly in their customer satisfaction. offers reviews of the banks, and it's worth checking out the strengths and weaknesses of your prospective institution before opening an account.

The takeaway

A money market account can be a great way to keep your reserve funds safe and keep some investment cash on the sidelines while still earning a decent return and maintaining access to your money. And while it's nice to see your savings grow, be sure to read the fine print rather than simply chasing the best money market rates.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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