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Money Market Accounts (1 Viewer)

C

cubd8

Footballguy
I am considering opening up a Money Market account and there appear to be some pretty good offers out there that are much better than my non-existent interest from my savings account.

These seem almost too good to be true.

  • Goldman Sachs Marcus: 1.85% APY, $ 1 minimum
  • Ally Bank: 1.80% APY, $1 minimum
  • Capital One: 1.75% APY, $10K Initial Balance
For those money market accounts:

1) Is the APY locked? Meaning, is this 1.75% of 1.85% just go get new business and in 6 months, the rate is very low again?

2) Any other hidden dis-advantages to these? Yearly fee's, maintenance, withdraw fees, etc.? At first glance, I don't see any of that.

3) How is the calculation determined? If i start off with $500.00, do I receive interest each month? Each year? If it 500.00 * 1.75 monthly?

 
Check out Amex Bank - i've had good success with them for several years now.

Monthly interest pay...  limited transfers each month, but honestly that's a non-issue with a true savings account.

Wait.. did you say $500?    Yeah, i wouldn't even both opening the account with a sum that small... the interest is negligible.

Get back to us when you have 50k.

 
cubd8 said:
I am considering opening up a Money Market account and there appear to be some pretty good offers out there that are much better than my non-existent interest from my savings account.

These seem almost too good to be true.

  • Goldman Sachs Marcus: 1.85% APY, $ 1 minimum
  • Ally Bank: 1.80% APY, $1 minimum
  • Capital One: 1.75% APY, $10K Initial Balance
For those money market accounts:

1) Is the APY locked? Meaning, is this 1.75% of 1.85% just go get new business and in 6 months, the rate is very low again?

2) Any other hidden dis-advantages to these? Yearly fee's, maintenance, withdraw fees, etc.? At first glance, I don't see any of that.

3) How is the calculation determined? If i start off with $500.00, do I receive interest each month? Each year? If it 500.00 * 1.75 monthly?
Click to expand...
1.  No, not locked, but at least the second two have had competitive rates for a number of years now.

2.  Generally not.  It would have to be disclosed.

3. Generally paid monthly but only .0175/12 each month.  73 cents per month on $500. (Using your example.)

 
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Dentist said:
Check out Amex Bank - i've had good success with them for several years now.

Monthly interest pay...  limited transfers each month, but honestly that's a non-issue with a true savings account.

Wait.. did you say $500?    Yeah, i wouldn't even both opening the account with a sum that small... the interest is negligible.

Get back to us when you have 50k.
Click to expand...
Yes, AMEX has a great high yield savings account with similar rates. 

 
mr. furley said:
it's 3.25% now

and, i guess i should clarify it's divided by 12  :hot:  
Click to expand...
Looks like it is a checking account.  You only get that rate up to $25,000 and you have to have direct deposit, use a debit card, have online banking and eStatements.  Still a great deal!

 
Dentist said:
Check out Amex Bank - i've had good success with them for several years now.

Monthly interest pay...  limited transfers each month, but honestly that's a non-issue with a true savings account.

Wait.. did you say $500?    Yeah, i wouldn't even both opening the account with a sum that small... the interest is negligible.

Get back to us when you have 50k.
Click to expand...
I was just providing a number as an example. Realistically, I could $50K into a Money Market account.

If I did that, how does the interest get calculated - monthly / yearly? What would the "new" savings from this example?

 
cubd8 said:
Can you explain why AMEX would be better than Marcus (or others)?
Click to expand...
Just relaying personal experience. I've had an AMEX savings account for several years now and never had any issues. You asked about fees, lowered rates, etc. and I haven't had any issues with those ever over the course of years. I'm sure the others are fine as well, only giving feedback on what I know. 

Read reviews and go with it, most of these would be just fine.

ETA -- We receive interest monthly.

 
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cubd8 said:
I was just providing a number as an example. Realistically, I could $50K into a Money Market account.

If I did that, how does the interest get calculated - monthly / yearly? What would the "new" savings from this example?
Click to expand...
Monthly

 
One other question:

I see Marcus has 2.45% rate for 12 month CD whereas the interest rate for money market account is 1.75%.

I realize the money is locked in for I believe the entire length of the CD, but wouldn't that be a better option than the MM account?

 
cubd8 said:
One other question:

I see Marcus has 2.45% rate for 12 month CD whereas the interest rate for money market account is 1.75%.

I realize the money is locked in for I believe the entire length of the CD, but wouldn't that be a better option than the MM account?
Click to expand...
If you don't care about liquidity, then probably.  The MMA rate could increase within the next year (and probably will) but it's unlikely to go up enough to make it a better deal within the one year time frame.

 
need2know said:
Monthly
Click to expand...
Thanks, is my math right?

For $25,000 MM a year:

(.0175/12) * 25000 = 36.45 per month

36.45 * 12 = 437.5 a year.

For $50,000 MM a year:

(.0175/12) * 25000 = 36.45 per month

72.91 * 12 = 875.00 a year.

For the CD at 12 months (2.45%)

(.0245/12) * 50000 = 102.08 a month (1,225 over the 12 months)

 
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cubd8 said:
Thanks, is my math right?

For $25,000 a year:

(.0175/12) * 25000 = 36.45 per month

36.45 * 12 = 437.5 a year.

For $50,000 a year:

(.0175/12) * 25000 = 36.45 per month

72.91 * 12 = 875.00 a year.

For the money market of a year at 12 months (2.45%)

(.0245/12) * 50000 = 102.08 a month (1,225 over the 12 months)
Click to expand...
For that Capital One account, it looks like the actual rate is 1.7361%.  The 1.75% is with the effects of compounding.  Interest is compounded and credited monthly.

You should get interest based on the number of days.  For instance, if you deposited $25,000 September 1,  September interest would be 30/365 X .017361 X 25000 = $35.67.

Due to compounding, October would be 31/365 X .017361 x 25035.67 = $36.91.  (Assuming the rate says the same.)

 
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cubd8 said:
One other question:

I see Marcus has 2.45% rate for 12 month CD whereas the interest rate for money market account is 1.75%.

I realize the money is locked in for I believe the entire length of the CD, but wouldn't that be a better option than the MM account?
Click to expand...
Where are you seeing this?

 
If you have the time and are able you can just chase signup bonuses at banks.  

Chase usually has a great one. SunTrust as well. 

Doctorofcredit.com

 
cubd8 said:
I was just providing a number as an example. Realistically, I could $50K into a Money Market account.

If I did that, how does the interest get calculated - monthly / yearly? What would the "new" savings from this example?
Click to expand...
Curious, why put $50k in a mm? The only reasons I can see doing this would be if you own a handful of properties so you need a large emergency fund, if you're saving for a down payment for a house, or if the stock market scares you right now.  

 
cubd8 said:
3) How is the calculation determined? If i start off with $500.00, do I receive interest each month? Each year? If it 500.00 * 1.75 monthly?
Click to expand...
The Y in APY stands for Yearly

EDIT: You receive interest monthly but its the monthly equivalent of 1.75 per year. The formula is typically compounded daily

 
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Just as a general note (bit of a tangent) in investment accounts for short term monies I've thrown some cash into JPST, which is currently at about 2.2%.  Ultra short duration, so it's not going to be affected much by interest rate changes.  

 
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shadyridr said:
The Y in APY stands for Yearly

EDIT: You receive interest monthly but its the monthly equivalent of 1.75 per year. The formula is typically compounded daily
Click to expand...
No.  Yield.  (Annual Percentage Yield.)

 
I’ve got a decent amount on the sidelines (just the past couple weeks) in Fidelity and like @Sand posted above there are short term NTF funds that have the same rates as these money markets. I had some rollover funds very recently so parking money at 1.75% in a mutual fund while I decide when and where to put it. I like this option better because it’s the same rates, no locks like CDs and the ability to invest in almost anything. Just an FYI, especially with a large amount that you might want to do other investments.

 
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