My money market account and I are on the outs since the interest rate continues to plunge deeper than an Olympic high diver (excuse my corniness). I’m on the hunt for a new institution to house my hard-earned cash. The beauty of a money market account is its high interest rate. In 2009 I earned $27 in compounded interest on my account—far more than I would’ve earned in a regular account. Also, though your money is accessible, it takes far more than a trip to the ATM to make a withdrawal. Nevertheless, it’s time for a change because this 1.1% I’m now receiving is unacceptable since I know there are institutions that will offer more. So how do you find the best rate? Here are a few things to consider as you shop around for an account.
Think about convenience. The interest rate should not be the sole determining factor in choosing a money market account. One of the reasons I stuck with my current institution as the rate continued to slide is because of its accessibility and good customer service. When I needed my money, I just answered a few security questions. If I had a problem, customer service was there to assist, day or night.
Determine your threshold. It’s important to determine how much money you can stash away since many money market accounts require a minimum investment. Since I’m still trying to pay off student loans, I like to keep a minimum of three months worth of rent money saved. While financial experts can give guidance, you must use your own discernment to determine what strategy is best for you, based on your lifestyle and financial landscape. It seems like, over the past few months, I’ve been running into so many unforeseen expenses (car towings, dead car starter, Uncle Sam)–so my rule of thumb is to never let my money market account (emergency fund) go below three months worth of rent. My logic: I can live without many things in my life but a roof over my head is not one of them.
Figure out your resources. For those on the hunt for the best rate, given their saving needs, MoneyAisle.com may be a good start. The site lets competing banks bid on your business. I’d caution against completely relying on the site, however, as I found higher interest rates by merely searching online. American Express offers a 1.30% on its money market account, although that’s a significant drop from the 1.50% it was offering about a month and a half ago. Still, for an account with no minimum balance, that’s not a bad interest rate and still a lot more than you’d get from a standard savings account.