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In 2008, I moved to the U.S. with my wife, Margarita, after living in Moscow. Although Margarita had an impressive career in Russia, she was not a U.S. citizen and had no credit history or credit score. If you don’t have a credit score in the U.S. this basically means you don’t exist, at least in the eyes of lenders. In fact, one in 10 Americans is considered “credit invisible,” meaning they don’t have enough credit history to produce a credit score.

This was a problem we knew we had to fix fast, especially if Margarita wanted be able to take out credit cards or an auto loan, or even apply for an apartment lease in the future.

By following a few basic steps, within 12 months, she had a very good credit score. Within 18 months, she had an excellent credit score and qualified for a rewards credit card with a $25,000 credit limit.

How to open a secured credit card

Opening a secured credit card is relatively easy. You have to provide the bank with a deposit, which is typically $200 or more. The bank will keep the deposit as collateral and will provide you with a credit limit equal to your deposit — some cards may even give you a higher limit without requiring a larger deposit. In Margarita’s example, she gave the bank a $500 deposit and received a $500 credit limit.

Once open, the credit card works like any other. Your credit limit, balance and payment information are reported to the three major credit bureaus. The only difference: If you fail to pay your credit card on time, the bank can take your deposit and apply it toward the debt.

So the bank has a guarantee that they won’t lose money. And you have the opportunity to prove that you will use your credit wisely.

How to use a secured credit card

Given that I was a bank credit risk manager at the time, I knew a bit about credit scoring. So I made sure Margarita followed this strategy:

  • She used the card every month, but for a very small amount. Her typical monthly bill would be around $10.
  • She made sure that she paid the balance in full and on time every month by signing up for automatic payments.
  • She subscribed to a credit scoring service to watch her score improve over time.

It took about six months for Margarita’s score to cross the 600 threshold. About 18 months after starting, she had a score well above 700. At that point, she applied for a rewards credit card. It had a great sign-on bonus and a  $25,000 credit limit.

So it only took a year and a half for someone to go from being a credit nobody to one of the most sought-after customers in the country. What was the trick? It is actually very simple.

3 key rules to follow

Use your card every month

In order to have a FICO® Score, you must have activity on your credit report over the past six months. If there is no activity on your report during this time, you cannot get a score.

Activity does not mean you need to go into debt. You can make a single purchase every month (even for just $1) and that is considered activity.

Keep your utilization low

One of the most important components of your credit score is utilization, making up 30% of your FICO® Score. Your utilization is calculated by dividing your statement balance by your total available credit. People with the best credit scores have utilization levels of 10% or less, but at most, you want to stay below 30%. That means if you have a credit limit of $1,000, you should not spend more than $300 a month.

The best strategy with a secured credit card is to select one small, recurring transaction and automate it. For example, use your secured credit card for your monthly Netflix or Spotify® bill.

Pay your bill in full and on time every month

The most important part of your credit score is a history of on-time payments. This factor alone comprises 35% of your FICO® Score. Even a single missed payment can have a very negative impact on your score. The best way to ensure that you don’t miss a payment is to set up autopay.

Additionally, make sure you pay your balance in full, so you will not have to pay interest. There is nothing more ridiculous than paying interest on a secured credit card. Remember: Your credit limit is equal to your deposit. You are literally borrowing your own money. But if you pay interest (at a high rate), you will be paying a bank to borrow from yourself.

This is just a long way of saying that Margarita’s approach worked. If you want to use a secured credit card to build your credit score, just use it every month for a $10 charge. And pay that balance in full and on time. As a result, your score should improve.

How to select the best secured credit card

When selecting a secured credit card, we recommend you focus on the annual fee — you shouldn’t have to pay one. You can find our roundup of the best secured cards here.

Our top choice is the Discover it® Secured.

Discover it® Secured

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Rates & Fees

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Discover it® Secured

Regular APR
25.24% Variable
Annual fee
$0
Credit required
bad-credit
Poor/New

How the Discover it® Secured works

There is a typical $200 security deposit, but you can receive it back if: 1. You pay your balance in full and close your credit card account, 2. You qualify to be refunded your deposit during one of Discover’s monthly automatic account reviews (starting at eight months from account opening) and 3. You upgrade to an unsecured card.

Cashback rewards: In this cashback program, you earn 2% cash back at restaurants or gas stations on up to $1,000 in combined purchases each quarter and 1% cash back on all other purchases.

The cashback match. The Discover it® Secured has a new cardmember bonus where Discover automatically matches all the cash back you’ve earned at the end of your first year. The cashback rate is great in general, as few secured cards have rewards, and it’s primarily beneficial for people who typically spend on gas and dining. The cashback match you receive is unique because there is no minimum spending requirement for you to earn the additional cash back. Most cards set a three-month time period and minimum spend for you to earn a new cardmember bonus, but not Discover.

An alternative

Capital One® Secured Mastercard®

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on Capital One's website

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Capital One® Secured Mastercard®

Regular Purchase APR
26.99% (Variable)
Annual fee
$0
Minimum Deposit
$49, $99, or $200
Credit required
bad-credit
Limited/Bad

Upgrading from a secured card to a traditional, unsecured card

Typically, for secured cards from the major issuers such as Discover, Capital One® and Citi®, the upgrade from a secured card to unsecured card involves:

  1. An automatic review process. This checks your eligibility for an unsecured card. The review process varies by issuer, with some cards starting it eight months from account opening and others waiting until 18 months.
  2. Receive your security deposit back. If you qualify for an upgrade and your balance is paid in full, you will receive your security deposit back.
  3. Receive an unsecured card. In addition to receiving your security deposit back, you will be transitioned to a traditional, unsecured card.

If your card doesn’t have an automatic upgrade process, we recommend the following:

  1. Check your credit score often to track your progress toward building credit.
  2. Search for a new card that fits your credit score. There are plenty of options for fair, good or excellent credit — and the better your score, the more options available.
  3. Check for pre-qualification. Before you apply for a new card, check to see if there’s a pre-qualification feature. This allows you to check your approval odds and shop around for the best offer without hurting your credit score. But keep in mind that pre-qualification isn’t a guarantee of approval.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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The Best CD Rates – May 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

The Best CD Rates
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Updated May 17, 2019

If you’re looking for a better yield on your savings and have time to burn, a high-rate CD at an online bank would be a great option. With a CD, you agree to lock up your funds in an account for a specific period of time, and in return the bank offers a higher yield than you’d find on a standard savings account. If you’re not keen on the idea of completely locking your money away for a set amount of time, you may want to consider a no-penalty CD. These accounts give you the benefit of locking down a rate for a set amount of time without requiring you to lock in your money for the length of the term.

CDs are often seen as the next level up after savings for that reason. If you’ve maxed out your savings account with enough funds to see you through the next year or so, it can be wise to start shoveling savings into a CD to maximize your returns.

For the best CD rates in the industry, check out online banks. They tend to offer much better interest rates than traditional banks, thanks to the lack of typical brick-and-mortar costs.

For example, let’s say you find a 12-month CD at a big brick-and-mortar bank that requires a $1,000 minimum deposit and pays 0.05% APY. If you were to open that account with just the minimum, you’d earn 50 cents after a year. Even a bigger deposit of $10,000 would only yield $5 at maturity.

At an online bank, on the other hand, you could earn 2.80% often with no minimum deposit. Opening the account with $1,000 would yield $28, while a $10,000 deposit would earn $280 in a year, a much better return on your money no matter how you look at it. (If you would rather get a savings account or money market with no time restriction, look at the best savings accounts or best money market accounts).

The best CD rates from top banks and credit unions

To find the best CD rates, we look for the banks and credit unions that consistently offer competitive CD rates month over month. This list is updated monthly, and competition continues to intensify. Here are the accounts from banks and credit unions with consistently competitive CD rates:

3 months – 5 years: Ally Bank – 0.75% APY – 3.00% APY; $0 minimum deposit to open (higher APY with higher deposit)
Ally Bank

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Member FDIC

Ally is one of the largest internet-only banks in the country. Ally’s former advertising campaign made it very clear: no branches = higher rates. And Ally has consistently paid some of the highest rates in the country across savings accounts, money market accounts and CDs. For savers with fewer funds, Ally is unique. There is no minimum deposit to open a CD. However, if you have more money, you can earn a higher APY. If you have more than $25,000 to deposit, you can earn between 0.75% APY and 3.00% APY. And one of our favorite features of Ally: they often (although not always) offer preferential rates on renewal. Far too often banks give the biggest bonuses to new customers, but Ally has done a good job of rewarding its existing customers. A good example of this is a 1% cash back promotion Ally is currently offering to new and existing customers. All deposits at Ally are FDIC insured up to the legal limit.

3-months:
  • 0.75% APY (less than $5k)
  • 0.75% APY ($5k minimum deposit)
  • 0.75% APY ($25k minimum deposit)
18-months:
  • 2.40% APY (less than $5k)
  • 2.55% APY ($5k minimum deposit)
  • 2.60% APY ($25k minimum deposit)
6-months:
  • 1.00% APY (less than $5k)
  • 1.00% APY ($5k minimum deposit)
  • 1.00% APY ($25k minimum deposit)
3-year:
  • 2.50% APY (less than $5k)
  • 2.60% APY ($5k minimum deposit)
  • 2.65% APY ($25k minimum deposit)
9-months:
  • 1.25% APY (less than $5k)
  • 1.25% APY ($5k minimum deposit)
  • 1.25% APY ($25k minimum deposit)
5-year:
  • 3.00% APY (less than $5k)
  • 3.00% APY ($5k minimum deposit)
  • 3.00% APY ($25k minimum deposit)
12-months:
  • 2.70% APY (less than $5k)
  • 2.70% APY ($5k minimum deposit)
  • 2.70% APY ($25k minimum deposit)
6 months – 5 years: Capital One – 0.60% APY – 3.00% APY; no minimum deposit to open
Capital One

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on Capital One’s secure website

Member FDIC

Capital One is famous for its credit card business. However, it has recently started getting aggressive with its CD rates. There is no minimum deposit for their 360 CDs, which make them comparable to Barclays’ and Ally’s CDs. Capital One CDs are FDIC insured, up to the federal maximum. And you get the comfort of depositing your money with a well-known bank. In addition to this bank’s competitive CD rates, it also has interest-earning savings, checking, and money market accounts that offer top rates. We believe this makes Capital One a great option for those wanting to do all their banking in one place.

CD TermAPY
6-months0.60%
9-months0.80%
12-months2.70%
18-months2.70%
24-months2.75%
30-months2.75%
36-months2.80%
48-months2.85%
60-months3.00%
1 Year – 3 Years: Rising Bank – 2.80% APY – 2.90% APY; $1,000 minimum deposit to open
Rising Bank

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Member FDIC

Rising Bank launched in February 2019 as the online division of Midwest BankCentre. Midwest BankCentre has been around since 1906 in Missouri and has acquired over $1 billion in assets. This bank decided to assert itself as a top competitor in the online banking space by offering competitive rates. While most online banks have pulled back on rate offerings, Rising Bank continues to offer a top 2.80% APY on its 1-year CD. However, unlike some of the top online banks like Ally and Capital One, Rising Bank requires a minimum deposit of $1,000 and caps balances at $500,000 on its CDs. If you have less than $1,000 to deposit into a CD, you’re better off choosing another online bank. If you have more than $500,000 to deposit into a CD, you may also want to consider another online bank. Aside from its rates, Rising Bank also distinguishes its CDs with the early withdrawal penalties. If you need to withdraw from the 1-year CD early, you’ll only incur a penalty that is 90 days’ worth of interest. If you need to withdraw early from the 18 to 36-month CDs, the penalty is 180 days’ worth of interest. One thing to be aware of is that Rising Bank compounds interest every three months. Other online banks compound interest monthly, so this is a bit of a downside. Once this CD matures, you can withdraw the full balance to close the account. If you don’t withdraw the full balance ten days after the maturity date, Rising Bank will automatically renew your CD. Rising Bank has a mobile app for your convenience.

CD TermAPY
1-year2.80%
2-year2.87%
3-year2.90%
6 months – 6 years: Goldman Sachs Bank USA – 0.60% APY – 3.05% APY; $500 minimum deposit to open
Goldman Sachs Bank USA

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on Goldman Sachs Bank USA’s secure website

Member FDIC

Our advertiser Marcus by Goldman Sachs is the online consumer bank of Goldman Sachs Bank USA (the large investment bank). Your funds are FDIC insured, and Goldman offers very competitive rates. Even better: there is only a $500 minimum deposit. So, if you don’t have enough money to meet the minimum deposit of the other banks on this list, or you are looking for another bank for your savings, GS is a good option. It also doesn’t hurt that they also offer some of the best CD rates in the market today. Here are their rates:

CD TermAPY
6-months0.60%
9-months0.70%
12-months2.70%
18-months2.60%
2-year2.65%
3-year2.70%
5-year3.00%
6-year3.05%
3 months – 5 years: Synchrony Bank – 0.75% APY – 3.10% APY; $2,000 minimum deposit to open
Synchrony Bank

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on Synchrony Bank’s secure website

Member FDIC

Synchrony used to be a part of GE, and now has an online bank that pays competitive rates. The online deposits are used to fund their store credit card portfolio – and the company is publicly traded. If you have $2,000 or more to deposit into a CD, Synchrony will offer you some of the best CD rates. However, if you have less than $2,000, you’re better off going with one of the other online banks or credit union above. Your deposit will be insured up to the FDIC limit. In a rising rate environment, this is a great way to get a high interest rate without locking yourself into a long term.

CD TermAPY
3-months0.75%
6-months1.00%
9-months1.25%
12-months2.70%
15-months2.85%
18-months2.70%
24-months2.80%
36-months2.85%
48-months2.90%
60-months3.10%
1 year – 5 years: Barclays Bank – 2.65% – 3.00% APY, no minimum deposit to open
Barclays

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Member FDIC

Barclays is one of the oldest banks in the world. Although they’re based in London, they do have a U.S. presence and offer competitive rates on their CDs and savings account. Currently, they’re offering some of the highest CD rates in the market, and they have an edge over the rest of the institutions on this list: they don’t require a minimum balance to earn the APY or open an account. Deposit as little or as much as you’d like into a term of your choice and you can start earning interest as long as the account is funded within 14 days of opening the CD. Additionally, your funds are insured through the FDIC.

CD TermAPY
1-year2.65%
2-year2.70%
3-year2.75%
4-year2.80%
5-year3.00%
3 months – 10 years: Discover Bank – 0.35% APY – 3.10% APY, $2,500 minimum deposit to open
Discover Bank

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Member FDIC

Discover is best known for cash back credit cards. However, Discover has also quietly built a leading internet bank that offers checking accounts, savings accounts and CDs. Discover has invested in a mobile banking app and strong on-shore customer service. Although Discover does not always have the highest rate, it is very close (within basis points) across all durations. If customer service and digital tools (like apps) are important to you, Discover is an excellent consideration. Note: you can even get a CD rate with a duration as short as 3 months. However, you would be better off opening a high yield savings account if you plan on saving the money for less than a year. Keep in mind that all CD terms come with an early withdrawal penalty if you choose to withdraw money before your maturity date. If your Discover CD is less than one year, the penalty is worth three months of simple interest. If the term is between one to three years, the penalty is worth six months of simple interest. Four-year CDs have a penalty that is worth nine months of simple interest. Five year CDs have a penalty that is worth 18 months of simple interest and seven to 10-year CDs have a penalty that is worth 24 months of simple interest.

CD TermAPY
3-months0.35%
6-months0.65%
9-months0.70%
12-months2.65%
18-months2.65%
2-year2.70%
30-months2.70%
3-year2.75%
4-year2.80%
5-year3.00%
7-year3.05%
10-year3.10%

The best no-penalty CD rates

No-penalty CDs are unique because these accounts allow customers to withdraw from their CD without incurring an early withdrawal penalty. These CDs are an attractive offer to customers as it provides no risk if they choose to withdraw their money early. Here are some of the best no-penalty CD rates that are available nationwide:

11 months – 14 months: PurePoint Financial – 2.15% APY – 2.50% APY; $10,000 minimum deposit to open
PurePoint Financial

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Member FDIC

PurePoint Financial is the online division of Union Bank. Both the parent bank and this online division are backed by financial giant, Mitsubishi UFJ Financial Group (MUFG). Under the MUFG Union Bank umbrella, this institution has acquired over $130 billion in assets. As its online division, PurePoint Financial has been able to offer its customers highly competitive rates not only in CDs, but in an online savings account.

Currently, PurePoint Financial is offering an extremely competitive rate of 2.50% on its 13-month no-penalty CD. It also offers an 11-month and a 14-month no-penalty CD, but those two accounts have lower rates than its 13-month no-penalty CD. Keep in mind that you’ll need at least $10,000 to deposit into any of these CDs. If you do choose to withdraw money from this CD before the term is up, you’ll need to withdraw the full amount. You’ll also have to wait seven days after you fund the account to withdraw any of the money. Here’s a full list of PurePoint Financial’s no-penalty CDs.

TermAPYMinimum balance to earn the APY
11-month2.15%$10,000
13-month2.50%$10,000
14-month2.25%$10,000
7 months – 13 months: Goldman Sachs Bank USA – 2.25% APY – 2.35% APY; $500 minimum deposit to open
Goldman Sachs Bank USA

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Member FDIC

Similar to its regular CDs, you only need a minimum of $500 to deposit into Goldman Sachs Bank USA’s no-penalty CDs. This makes these CDs highly attractive to customers with smaller deposits. If you choose to open one of these CDs, you’ll only be locked in for seven days after you fund the account. After the seventh day, you’re free to withdraw your funds, but keep in mind that you’ll need to withdraw the full amount. These CDs are an excellent option if you want your money to remain liquid or if you want to invest your money into an interest-earning account for a short amount of time. One thing to note is that the 7-month no-penalty CD has a much higher rate than the regular 6-month CD (2.25% APY vs 0.60% APY). The high APY makes Goldman’s 7-month no-penalty CD a fantastic option if you want to earn interest in a short amount of time. Here is Goldman’s full list of no-penalty CD rates:

TermAPYMinimum balance to earn the APY
7-month2.25%
$500
11-month2.30%
$500
13-month2.35%
$500
11 months: Ally Bank – 1.80% APY – 2.30% APY; $0 – $25,000 minimum deposit to earn APY
Ally Bank

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Member FDIC

Unlike the other two banks that offer multiple terms, Ally Bank only offers one term on its no-penalty CD. While Ally doesn’t require a minimum deposit to open, it does reward higher balances with higher APYs. This no-penalty CD is great for low-balance individuals who want to keep their money liquid. However, if you’re okay with locking your money into a CD for 12 months, you’re better off going with Ally’s regular 12-month CD as it has a higher APY (2.70% APY vs 1.80% APY) and doesn’t have a certain balance requirement to earn that high rate. If you still choose to open Ally’s 11-month no-penalty CD and you need to withdraw money before the terms ends, you’ll need to withdraw your funds in full and won’t be able to do so until seven days after funding the account. Here are the tiered rates for Ally’s no-penalty CD:

TermAPYMinimum balance to earn the APY
11 months1.80%Up to $5,000
11 months2.15%$5,000
11 months2.30%$25,000

The highest CD rates from banks and credit unions by term

The following banks and credit unions are currently offering the highest CD rates for each term.

Best 1-year CD rates

Best 1-year CD rate from a National Bank: CD Bank – 3.00% APY, $10,000 minimum deposit
12 Month CD from CD Bank

CD Bank is the online division of TBK Bank, which was established in 1981 and has acquired over $4 billion in assets. This online division has only been around since 2017, but it launched with competitive rates at the time and has continued to offer competitive rates on its shorter-term CDs as the CD market has risen. At this moment, CD Bank is offering a 1-year CD with an APY of 3.00%. You will need to deposit a minimum of $10,000 in order to earn this APY. The early withdrawal penalty for this CD is equal to 365 days of interest on the withdrawn amount. Be aware that once this CD matures, the only two ways you can receive the fully matured funds is via a cashier’s check or outgoing wire transfer. If you choose to use an outgoing wire transfer, the bank may charge you a $15 fee.


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on CD Bank’s secure website

Member FDIC

Best 1-year CD rate from a Credit Union: State Department Federal Credit Union – 2.73% APY, $500 minimum deposit
12 Month Certificate from State Department Federal Credit Union

State Department Federal Credit Union was established in 1935 by a group of the United State Department of State employees. While it was originally intended to help those employees, membership has expanded to include a lot more people. You can become a member of this credit union if you’re a U.S. Department of State employee, are a part of one of the credit union’s organization affiliates, through group membership, or an immediate family member of an existing member of the credit union. If you don’t qualify through any of those ways, you can choose to become a member of the American Consumer Council (ACC) when you apply for membership to this credit union. Once you become a member of this credit union, you can open its 12-month CD, which is currently earning a 2.73% APY. You’ll need a minimum of $500 to open the account. This CD has an early withdrawal penalty that is worth 180 days of interest.


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on State Department Federal Credit Union’s secure website

NCUA Insured

Best 2-year CD rates

Best 2-year CD rate from a National Bank: CD Bank – 3.20% APY, $10,000 minimum deposit
24 Month CD from CD Bank

Not only is CD Bank offering a high rate on its 1-year CD, its also offering a 2-year CD with a high rate. You will need to deposit a minimum of $10,000 in order to earn an APY of 3.20%. The early withdrawal penalty for this CD is equal to 18 months interest on the withdrawn amount. Just like the 12-month CD, once this CD matures, the only two ways you can receive the fully matured funds is via a cashier’s check or outgoing wire transfer. If you choose to use an outgoing wire transfer, the bank may charge you a $15 fee.


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on CD Bank’s secure website

Member FDIC

Best 2-year CD rate from a Credit Union: State Department Federal Credit Union – 2.83% APY, $1,000 minimum deposit
24 Month Certificate from State Department Federal Credit Union

State Department Federal Credit Union also has a top rate on its 24-month CD. With a minimum deposit of $500, you can earn an APY of 2.83%. The early withdrawal penalty on this CD is also 180 days just like the 12-month CD. If you’re not already a member of this credit union, you’ll have to first join the credit union before you can open this account. If you don’t qualify through employment, organization affiliation, or family relations, you can select to join the ACC when you apply for membership.


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on State Department Federal Credit Union’s secure website

NCUA Insured

Best 3-year CD rates

Best 3-year CD rate from a National Bank: First National Bank of America – 3.00% APY, $1,000 minimum deposit

36-47 Month CD from First National Bank of AmericaFirst National Bank of America was established in 1955. Originally, its goal was to focus on the local Michigan community’s financial needs. However, they decided to expand in 2011 in an effort to help even more people. Today, this bank services customers nationwide. First National Bank of America is currently a top APY of 3.00% on its 36-month CD. You’ll need a minimum of $1,000 to open the account. You’ll have to call the bank to learn what the early withdrawal penalty is for this term as the bank doesn’t disclosure this information online.While this bank offers a top rate for a 3-year CD, other national banks offer higher rates on shorter terms. If you’re willing to keep your money in a CD for one more year, you might want to consider this bank’s 4-year CD.


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on First National Bank Of America’s secure website

Member FDIC

Best 3-year CD rate from a Credit Union: Sun East Federal Credit Union – 2.75% APY, $500 minimum deposit
36 Month CD from Sun East Federal Credit Union

Sun East Federal Credit Union was founded in 1949 by employees of the Sun Oil Company. Since its establishment, it’s grown to acquire over $594 million in assets and has opened its membership to include more individuals. You can join this credit union by making a $10 donation to the Sun East Charitable Foundation if you don’t qualify with its other fields of membership. Once you become a member, you can open the credit union’s 3-year CD. With a minimum deposit of $500, you can earn an APY of 2.75%. This CD has an early withdrawal penalty that is worth 180 days of interest. If you’re wanting to get your foot in the door with a credit union, this is a great account to start off with, but if you’re looking for the account with the best CD rate, you should consider one of the national banks on this list with a shorter term.


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on Sun East Federal Credit Union’s secure website

NCUA Insured

Best 4-year CD rates

Best 4-year CD rate from a National Bank: First National Bank of America – 3.10% APY, $1,000 minimum deposit

48-59 Month CD from First National Bank of America
First National Bank of America is offering the best CD rate on a 4-year CD. With a minimum deposit of $1,000, you can earn 3.10% APY. This is definitely worth it if you’re okay with locking your money away for four years. Make sure to ask the bank what the early withdrawal penalty is on this CD just in case you need to withdraw before the term ends.


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on First National Bank Of America’s secure website

Member FDIC

Best 4-year CD rate from a Credit Union: Veridian Credit Union – 3.05% APY, $1,000 minimum deposit
41 Month Bump Up CD Special from Veridian Credit Union

Veridian Credit Union was established in 1934 by employees of John Deere. According to Veridian Credit Union’s history, the employees wanted to provide alternatives to for-profit institutions for their coworkers. Today, Veridian operates similarly even though they’ve expanded their field of membership to include almost anyone by allowing applicants to register as a user of Dwolla if they’re not eligible any other way. Once you become a member, you can open this 41-month CD with a minimum of $1,000. This account earns an APY of 3.05%. The early withdrawal penalty on this CD is equal to 180 days’ interest. Veridian Credit Union allows you to manage your account online as well as through their mobile app.


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Best 5-year CD rates

Best 5-year CD rate from a National Bank: First National Bank of America – 3.20% APY, $1,000 minimum deposit

60 Month CD from First National Bank of AmericaFirst National Bank of America makes it on our list of the best CD rates a third time. Its 60-month CD is currently earning an APY of 3.20%. You’ll need a minimum of $1,000 to open the account. This bank also offers Flex CDs, which will allow for a one-time increase on the rate during the term of the account. The APY on the 60-month Flex CD is currently lower than the rate on the regular 60-month CD, but may be worth looking into.


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Best 5-year CD rate from a Credit Union: Sun East Federal Credit Union – 3.00% APY, $500 minimum deposit
60 Month CD from Sun East Federal Credit Union

Sun East Federal Credit Union makes it on our list for a second time. Its 60-month CD is currently earning a top rate amongst credit unions with a 3.00% APY. You’ll need a minimum of $500 to open the account. The early withdrawal penalty for this term is only 180 days, which is pretty low for long-term CDs.


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Questions to ask before you open a CD

1. How are CDs different from savings accounts?

With a CD, the saver and the bank make stronger commitments. The saver promises to keep the funds in the account for a specified period of time. In exchange, the bank guarantees the interest rate during the term of the CD. The longer the term, the higher the rate – and the higher the penalty for closing the CD early. With a savings account, you’re limited to six withdrawals or transfers per month. Otherwise, you can empty the account at any time without paying a penalty. You can’t lock in the interest rate on a savings account, though, since the bank can change the interest rate at any time.

2. Am I better off keeping my cash in savings?

CDs work best if you’re confident you won’t need to access a certain amount of money for a specified period of time. Let’s say you have $10,000 laying around that you can safely say you won’t need to use for two years. In a high-yield savings account earning 2.35%, you would earn $475.52 over two years with annual interest compounding — and potentially even more, if your bank compounds interest more frequently. If you put that money into a 2.90% 2-year CD, you would earn $588.41 (compounding yearly) once the account matures. The extra interest income is easy money, considering the ease of opening an account online. However, if you think you might need to use the money in the next couple of months, especially if your finances are already a little rocky, a savings account is a much better idea for its better flexibility.

It’s important to note that deposit rates are a bit in flux right now, due to the uncertainty surrounding the federal funds rate (more on that below). But we’re currently seeing some high, favorable interest rates on 1-year CDs, rates that outstrip savings account rates.

If you can afford to part with the funds, “choosing a 1-year CD now does make sense rather than keeping the money in a savings account,” says Ken Tumin, founder of LendingTree-owned DepositAccounts.com. “However, it is possible that 1-year rates could go below some savings account rates.”

That’s why it’s important to compare rates before you sign up for a certain account.

Tumin also notes that there is an added tax benefit to opening a 1-year CD now over a savings account. With a 1-year CD, you can choose to have interest paid at maturity, or in 2020 on accounts opened now. Taxes would be owed on that interest for 2020, but not paid until 2021. Savings accounts, on the other hand, pay out interest each month. So a savings account opened today will generate interest income for the 2019 tax year.

3. What CD term length should I select?

The early withdrawal penalties on CDs can be significant. On a 1-year CD, 90 days’ worth of interest is a typical penalty, although it can reach as high as 180 days. On 2- and 3-year CDs, a 6-month penalty is about average. The impact of the penalty on your return can be significant: if you opened a one-year CD with a 2.65% APY and closed it after six months, you would forfeit half of the interest and earn only 1.32%. You would have been better off with a savings account paying 2.25%.

The worst case scenario is with the longest CDs. 5-year CDs usually have a one-year penalty for taking out funds early. If you open a 5-year CD and close it quickly, you could actually end up losing money.

Given the risk of early withdrawal penalties, it’s important that you’re completely confident that you will not need to withdraw the money early. Check that you already have enough savings in a flexible emergency fund to cover you for the next few years in the event of an accident or surprise trip to urgent care. Ask yourself whether your deposit would be put to better use paying off any debts. If you’re not completely convinced you can sock away that much money for such a commitment, go for a shorter CD term or a savings account.

As of right now, if you’re trying to jump on the best rates and have cash to stash away for years, your best bet is to lock in a 5-year CD to get the best rates possible.

“It doesn’t look like we’ll see another Fed rate hike in the first half of the year,” says Ken Tumin. “In the last month or two, we’re seeing some drops in CD rates.”

However, this downward movement looks like more of a correction being made by banks who may have boosted their CD rates too far too fast, instead of signaling the start of an industry-wide drop in rates.

“We won’t see a big drop until we see signs that the Fed will start cutting rates,” Tumin notes.

Tumin suggests finding long-term CDs with small or mild withdrawal penalties, like Ally. That way, in the event you do need to break into your funds (whether for an emergency or to move to a new, higher rate), you won’t lose the majority of your savings. So while there are still 5-year CDs out there with 3% APY and higher, you’re going to want to lock those in for the long term.

4. Should I consider my local bank or credit union?

The interest rates shown in this article are all from credit unions and online banks that offer products nationally. However, our product database includes traditional banks, community banks and credit unions.

If traditional banks offered better rates, they would have been featured in this article. Internet-only banks have dramatically better interest rates. That should not be surprising — because internet-only banks do not have branches, they are able to pass along their cost savings to you in the form of higher interest rates and lower fees.

If you’re worried about early withdrawal penalties, credit union CDs might be your best bet; on average, they tend to have lower penalties than banks. Pair that with high credit union CD rates, and you’ve got a winning savings combo. (Interestingly, while internet banks tend to offer the best CD rates, they also tend to assess bigger early withdrawal penalties than brick-and-mortar banks.)

How to find the best CD for you

If you don’t find an account that meets your needs in this article, you can use the MagnifyMoney CD tool to find the best rate for your individual needs. Input your zip code, deposit amount and term. The tool will then provide you with CD options, from the highest APY to the lowest.

Even though CDs are traditionally pretty structured, you still have hundreds of options available to you. If your savings goal is years in the future, look closer at longer terms like 5- and even 10-year accounts. If you don’t quite have thousands of dollars to stash away, you can find a bank that requires a lower minimum deposit, if at all. You can also find select no-penalty CDs, which tend to be around one year long or less.

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Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
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Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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Best Money Market Rates & Accounts – May 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

If you’re looking to save more money beyond your regular savings account, consider adding a money market account to the mix. A money market account can earn at a higher rate than a savings account, especially if you have a larger balance to deposit. Many MMAs tier their rates as well, rewarding higher balances with higher rates.

Like most deposit accounts, the rate on money market accounts has grown over the past few years, up from 0.188% APY in 2016 to 0.394% APY in Apr. 2019. Savings account rates have also increased, but still averaged only 0.272% APY in Apr. 2019.

You can do much better than a 0.391% APY on a money market if you’re willing to break with traditional brick and mortar banks. Opening an MMA at the bank around the corner, for example, may not yield more than 1% APY, while an internet-only bank might offer a rate of 2% APY or higher. With a rate like that, you can boost your savings by a wide margin.

If you were to put $50,000 into an MMA earning 0.04%, you would earn only $20 in interest over a year. Put that same starting amount into an online bank account at 2%, and you’d earn $1,000 in interest over a year.

With so many options out there, it can seem daunting to search for a new bank account with a potentially new bank. We’ve made it it easier for you by rounding up the best money market accounts out there. We searched through over 12,000 banks and credit unions to find the money market accounts paying the highest interest rates. We also looked at an account’s minimum requirements and fund accessibility.

Overall, we found that internet banks consistently beat the competition. You might not recognize all their names — new online banks are continuing to crop up — but if it’s high interest rates you’re looking for, it might be good to branch out since online banks are the way to go. Here are the best rates for May 2019:

1. Trusted Bank: Capital One – 2.00% APY, $10,000 minimum balance to earn APY

360 Money Market from Capital OneYou may think of credit cards when you think of Capital One, but don’t overlook their deposit accounts. The 360 Money Market account currently comes with a great 2.00% APY. While the bank doesn’t require you to have a minimum amount to open the account, you will have to maintain a balance of $10,000 or more to earn their high rate. If your balance falls below that amount, you’ll earn an APY of 0.85%. We really like that Capital One doesn’t impose any monthly fees, and while they don’t offer checks, they do provide you with an ATM card that you can use to withdraw up to $1,000 per day. While you’re able to make an unlimited amount of withdrawals from an ATM per month, remember that you’re limited to making six certain transfers and withdrawals per cycle due to Federal Law. To access this account, you may do so online, in person, or on-the-go through Capital One’s mobile app.

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2. Favorite Online Package: Ally – 0.90% APY, no minimum deposit and link to free checking

Online Savings Account from Ally BankAlly Bank is a very popular internet-only bank. If you keep a daily balance of $5,000 or less, you will earn the 0.90% APY. If you’re able to keep a minimum daily balance of $25,000 the APY increases to 1.00%. Although the interest rate on the money market account is not the highest, Ally does offer a very competitive overall package – particularly if you link the account to an Ally checking account. The checking account has no minimum balance and no monthly fee. You can link your money market account to your checking account to provide overdraft protection. Money would be transferred to your checking account with no transaction fee if you ever made a mistake. You would be able to access your money market account with your Ally ATM card, which has free AllPoint access and up to $10 of non-Ally ATM fees reimbursed every month. This money market account is a nice way to provide yourself with overdraft protection while earning interest. If you don’t need check-writing capabilities on your savings, you would still be better off with Ally’s savings account.

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The rest of these accounts are listed by APY regardless of minimum balance.

3. Highest Overall Rate: Western State Bank – 2.50% APY, no minimum balance to earn APY

High Yield Money Market from Western State BankWestern State Bank was chartered in 1902 as the Bank of Webster due to its location in Webster, North Dakota. In 1966, a group of people purchased the Bank of Webter and in 1968, this group of individuals moved the bank’s headquarters to another part of North Dakota and changed its name to Western State Bank. At that time, the bank had $600,000 in assets. Today, the bank has over $1 billion dollars in assets and serves customers nationwide.

Western State Bank is currently offering a remarkable 2.50% APY on its High Yield Money Market account. The bank does not require a minimum deposit amount to open the account nor do they require a minimum balance to earn the high rate. They do, however, place a limit on the how large of a balance the account can hold. If your balance exceeds $2,000,000, the APY will drop to 2.25%. While this account has an excellent rate, it does lack in features. Western State Bank will not provide checks or a debit card to go along with this account. You can only withdraw money via ACH, wire transfer, or the bank can mail you a cashier’s check if you call and ask for this method. The bank does have ACH limitations to keep in mind. You can only transfer $25,000 at a time and you can only do so six times per month (not exceeding $100,000). If you’re looking for a money market account with check-writing capabilities or ATM access, then this account may not be for you. If you’re looking for a high-yield savings account, then this account is a great place to deposit your money and earn interest.

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on Western State Bank’s secure website

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4. Highest Overall Rate: Investors eAccess – 2.50% APY, no minimum balance to earn APY

eAccess Money Market from Investors eAccessInvestors eAccess is a new division of Investors Bank and launched at the beginning of April 2019. Powered by a bank that has over $26 billion in assets, it was able to show up in the market with a high-yield money market account. There isn’t a minimum deposit to open nor is there a minimum balance to earn the high APY. Once you open the account, you can start earning the 2.50% APY. You can fund the account via ACH or by sending Investors eAccess a check by mail. This account doesn’t offer check-writing capabilities and it doesn’t come with a debit or ATM card. You can withdraw money via ACH. You can only withdraw less than $250,000 per monthly statement cycle. Remember that money market accounts have the same limitation as savings accounts, so you can only make six certain transactions per monthly statement cycle. You can do all of your banking online or you can download Investors Bank’s mobile banking app. The bank has not created a specific app for Investors eAccess, but its website claims that you can manage this account from that app.

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on Investors EAccess’s secure website

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5. High Rate: earn.bank – 2.46% APY, $100 to open, $0 minimum balance, $10k to avoid $10 monthly fee

Money Market Account from earn.bankearn.bank is a division of Silvergate Bank, a state-chartered bank headquartered in San Diego, CA. The state-chartered bank has over $1 billion in assets, and your deposit would be FDIC insured up to the legal limit. Silvergate Bank created earn.bank to provide “a transparent, powerful savings vehicle that will help you meet your savings goals”. At 2.46% APY, the internet-only bank is certainly starting out strong. You only need $100 to open the account and there isn’t a minimum balance requirement to earn the high rate. A few downsides to this account include a $10 monthly maintenance fee that comes with a steep balance requirement if you want it waived. You would need to maintain an average daily balance of $10,000 to avoid the monthly fee. The account does not come with check-writing privileges and there is no ATM access. You’ll also want to make sure you’re enrolled in eStatements as you’ll be charged a $25 fee for each paper statement you receive. You can deposit your funds via ACH (electronic transfer), which can take a couple of days. Just remember: there is a limit of 6 withdrawals per calendar month.

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on earn.bank’s secure website

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6. High Rate: UFB Direct – 2.45% APY, $25,000 minimum deposit and balance to earn APY

UFB Premium Money Market - New Money from UFB DirectUFB Direct is a division of Axos Bank, a federally chartered, publicly traded and FDIC-insured bank based in San Diego. In recent months, UFB Direct has become increasingly aggressive with high rates targeting big balances. The APY of 2.45% is an outstanding rate, but you need to have a balance of at least $25,000. If your balance drops below that, you’ll earn an APY of 0.50%. You’ll also need to keep an average daily balance of at least $5,000 in the account in order to avoid a monthly maintenance fee of $10.00. You will get a Visa debit card and have access to limited check writing. We think this is the best option for people with big balances that they want to keep in a money market account.

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7. High Rate: BankPurely – 2.25% APY, $25,000 minimum balance, ATM access

BankPurely
BankPurely, a division of Flushing Bank, currently offers a 2.25% APY on their money market account. You’ll have to either deposit a minimum amount of $25,000 or grow your balance to that amount in order to earn interest. If you’re not able to deposit that amount, you may want to go with Sallie Mae since they have a great rate for a lower deposit amount. However, BankPurely does provide an ATM card, which gives you access to surcharge-free ATMs within the Allpoint Network. Just keep in mind that you’ll be limited to withdrawing $1,000 per business day. Per Federal law, you’ll also be restricted to making six transfers per month. You’ll have access to online banking as well as to their mobile banking app to manage your account. Plus, if you open an account with BankPurely, they’ll plant a tree.

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on BankPurely’s secure website

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8. High Rate: Virtual Bank – 2.36% APY, no minimum balance to earn APY

eMoneyMarket from Virtual BankVirtual Bank, a division of IBERIABANK, is currently offering an introductory rate on their money market account that is the highest available. This rate is guaranteed for 12 months and will adjust to the standard rate that is in effect at the time. New customers can earn the 2.36% APY by depositing a minimum of $100. While there isn’t a minimum balance requirement to earn the APY, there is a balance requirement to avoid incurring the $5 monthly service fee. All you’ll have to do is maintain a daily minimum balance of $100 and they’ll waive the monthly fee. While this account doesn’t have any check writing capabilities, you can easily move money in and out of the account via ACH. Virtual Bank has a mobile app, that has the mobile check deposit feature, in addition to their online banking platform.

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on Virtual Bank’s secure website

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9. High Rate: Bay State Savings Bank – 2.35% APY, $5,000 minimum to open and avoid $7 monthly fee

Smile Worcester County Consumer Money Market from Bay State Savings BankBay State Savings Bank opened its doors in 1895 with a commitment to “be the community bank of choice” for its community. As time has gone on, this community bank has evolved to include digital banking and welcomes all U.S. residents to apply for an account. The bank has also grown to acquire over $400 million in assets. Currently, it’s offering a high rate on a money market account that does more than just hold your money. The money that you deposit helps Bay State Savings Bank support the economic growth of areas in need within Worcester County. So, not only will you be earning an outstanding APY 2.35%, but you’ll also be helping to an area in need of support. There are a few items to be aware of prior to opening the account: there is a $7 monthly fee if you can’t maintain a $5,000 balance and outgoing ACH transfers are limited to $10,000 per transaction. This account does come with check-writing capabilities and online bill payment services. Bay State Savings Bank is not only insured by the FDIC, but they are also insured by the Depositors Insurance Fund (DIF).

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on Bay State Savings Bank’s secure website

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10. Top Choice: Sallie Mae – 2.30% APY, no minimum balance and checks available

Money Market from Sallie Mae BankIf you have student loan debt, you probably are not very excited to see Sallie Mae at the top of this list. However, many people are unaware that Sallie Mae also operates an internet-only FDIC-insured bank with some of the best interest rates in the country. You can earn 2.30% APY, compounded daily and paid monthly. There is no minimum balance and no monthly maintenance fees. You will have check-writing capabilities (although the standard money market limit of six per month applies to this account). The easiest (and best) way to fund and access your funds is via electronic transfer from your existing checking account. If you want a simple account with no fees and check access – this is a good bet. Sallie Mae has just recently increased the APY, making this one the best rates in the country.

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on Sallie Mae Bank’s secure website

Member FDIC

11. High Rate: Self-Help Credit Union – up to 1.88% APY, $500 minimum deposit and minimum balance

Money Market from Self-Help Credit UnionSelf-Help is a credit union that anyone can join. If you don’t live, work or worship in one of their eligible counties, you can join by donating $5 to the Center for Community Self-Help. The contribution is tax deductible and will make you eligible for credit union membership. (You can learn more about how to join the credit union here.) At a credit union, your funds are insured up to $250,000 – but it is by the NCUA instead of the FDIC. The money market offers an APY of 1.88% on balances from that are at least $500. You also need to maintain the balance during the month – otherwise you will be charged a monthly maintenance fee. You are allowed 6 free withdrawals or transfers from the account each month (including checks).

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on Self-Help Credit Union’s secure website

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Special Mention: Great Rate for Small Deposits: Premier Members Credit Union – 4.00% APY up to $2k

Premier Members Credit Union

Premier Members Credit Union is open to anyone willing to make a $5 donation Impact on Education, a charity for the Boulder Valley School District. This credit union is currently offering an incredible rate of 4.00% with only $5 to open the account. You can earn this APY on balances up to $2,000. Amazingly, even if you grow the balance up to $5,000, you’ll earn 1.49% APY. As the balance increases, the APY decreases to the following:

  • $5,000.01-$10,000: 0.75%
  • $10,000.01-$50,000: 0.50%
  • $50,000.01-$100,000: 0.40%
  • $100,000.01-$250,000: 0.35%
  • $250,000.01+: 0.30%

Premier Members Credit Union rewards low balance savers by placing the highest rate with the lowest deposit, but if the balance grows they start using a reverse tier system where they blend the APY as the balance grows. Checks are available with this account, but you can only make six withdrawals per month. Each additional withdrawal will be assessed a $10 fee.

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on Premier Members Credit Union’s secure website

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What to consider before opening a money market account

Before you get bogged down in the details, let’s take a look at some quick pros and cons of a money market account.

Pros:Cons:
  • Typically carry higher interest rates than savings accounts
  • Convenient access to your funds with check-writing abilities and a debit/ATM card (not offered on all accounts)

  • May carry monthly maintenance fees or a high balance to waive one
  • Still limited to six transfers and withdrawals per month like a savings account (or you’ll face a fee)
  • You’re better off using a higher yield product like CDs for money you won’t need in the immediate future

Who money market accounts are best for

Now that you know the basics of a money market account, should you get one? They’re a good choice if you have a big deposit you’d like to keep safe and growing at a high interest rate. Then when you need to access that money, perhaps for an upcoming purchase or in an emergency, you can often easily do so with an ATM/debit card or by writing a check.

Savings accounts vs. money market accounts

Money market accounts often earn a higher rate than standard savings accounts. The caveat is that MMAs often require higher opening deposits or higher balances than a standard savings account. Even so, you may also find that one bank’s top money market rate earns at the same rate (or lower) as a savings account at another bank.

For example, one of the best savings accounts, Ally’s Online Savings account, offers a 2.20% APY while its money market account earns at a mere 0.90% APY (on most balances). So if it’s high interest rates you’re after, be sure to compare accounts across the board rather than turning immediately to a money market account. Just be sure to keep your balance limits in mind when shopping around.

What often separates money market accounts from savings accounts is their check-writing abilities or issued ATM/debit cards. This provides easier access to your money especially if you have larger balances you’re saving for a bigger purchase. Not all money market accounts offer these features, though. Furthermore, money market accounts are still savings vehicles, so they’re also limited to six outgoing transactions per month, like transfers and withdrawals.

Read more about the differences between money market and savings accounts here.

CDs can offer higher rates than money market accounts

Savings accounts and money market accounts often pay much lower interest rates than CDs. Right now you can get a 1-year CD paying 2.70% APY (with only a $500 minimum). You can find the best CD rates here. If you build a CD ladder, you can take advantage of 5-year rates that are currently as high as 3.40%. Creating a CD ladder also allows you to protect your investments over the years by locking in today’s high rates in a long-term account while also staying flexible for any potential rate increases with your shorter-term accounts. The interest rate on a money market account can change right away, at the bank’s discretion.

If you need some savings more immediately, money market accounts are great places to keep that money— it’ll keep growing, while still remaining accessible. In contrast, should you need to access your CD funds before it matures, you’ll likely face a pretty heavy penalty, typically forfeiting three to six months of interest.

A money market account isn’t the same thing as a money market fund

Money market accounts, like deposit accounts, provide FDIC insurance on your deposits up to $250,000. Money market funds, on the other hand, are investment accounts, most likely sold by your broker, and are regulated by the Securities and Exchange Commission instead. Money market funds invest in highly liquid cash and cash equivalent securities that typically mature within 13 months.

As an example, Vanguard offers the Prime Money Market Fund. Like other money market funds, this one “invests in short-term, high-quality securities.” Its objective is to keep the fund trading at $1 and generate a decent return. Still, money market funds can end up with a lower return than those you see from the money market accounts listed in this article. Since money market fund returns are dependent on the market and the Federal Reserve Rate, it’s important to keep an eye on the current interest rate climate to see whether investing in these funds are worth your time and money.

Money market funds charge expense ratios, or management fees, that are charged as a percentage of your fund (Vanguard’s is currently 0.16% as of Dec. 2018). You can also end up paying some transaction fees. It’s important to watch out for an account’s fees which can often lessen your total investment in the end. Like money market accounts, money market funds can also require a high minimum balance to open an account.

Most people compare the return of a money market fund (sold by their broker) to the interest rate paid by a traditional bank (sold by their local bank teller). As a result, they are willing to take the risk of a money market fund. However, as you can see from the best money market accounts in this article, you can get FDIC insurance and beat the return of most funds without taking on the risk of market investments.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Nick Clements
Nick Clements |

Nick Clements is a writer at MagnifyMoney. You can email Nick at [email protected]

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