As the Federal Reserve boosts short-term interest rates, yields on bank deposit accounts and money market mutual funds have been ticking up.
Unlike money funds, which are investment accounts that contain high-quality, short-term securities (see kiplinger.com/links/moneymarket), money market deposit accounts (MMDAs) have Federal Deposit Insurance Corp. coverage. That means if the bank holding your MMDA goes belly-up, you won’t lose your cash (up to the insured limit of $250,000 per depositor per bank in each account ownership category). MMDAs and savings accounts both provide safe, easily accessible places to store cash. And lately, top rates on MMDAs and savings accounts have also been close, says Nick Clements, cofounder of personal finance site MagnifyMoney.com.
If the ability to withdraw money directly from savings is important to you, an MMDA has the edge over a savings account. MMDAs commonly come with a debit or ATM card. (The Synchrony High Yield Savings account, however, yields a respectable 1.75% and comes with an ATM card; plus, fees that out-of-network U.S. ATM operators charge are refunded up to $5 per month.)
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Among top-yielding MMDAs, the online Redneck Bank Mega Money Market account comes with a debit card and has consistently offered strong rates over the past few years. It now yields 2% on up to $50,000 (0.5% yield on the portion of the balance higher than that cap).
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