Money Savings Account

Money market savings accounts are offered by banks and credit unions, require minimum balances to open an account. The minimum deposits are slightly higher and could amount up to $1,000 to $2,500. But in the long run, you can see higher yields for those deposits because along with it is the interest rates offered by the bank or credit union on your money market savings account. Another feature, which can sometimes be dreadful for some, is that money market savings account holders are allowed to make withdrawals up to limited times only per month.

Usually, banks allow the account holders six withdrawals per month but there are also other banks who offer just three times. Three of the withdrawals can be made with a check. It may look restricted but on the real side, these are just enough. This can be a good motivating factor for depositors to limit their withdrawals and let their funds stay growing. Due to the limitations on the withdrawals, money market savings account should not replace a checking account. People with checking accounts don't have to give up their checking accounts when opening a money market savings account.

Money market savings have no maturity date, unlike certificates of deposit, but are designed to hold funds that are not needed instantly. They are liquid, meaning depositors can withdraw them any time but under a few restrictions. But since they pay high interest, it's better to get hold of the account and keep the funds intact on the money market account. But of course, no one's stopping a depositor to withdraw the funds, especially when an emergency arises. The general point is that the depositor should consider deeply his bank options and whether he'll really not need the funds for the next few weeks or months.

Money market accounts are sometimes confused with market mutual fund accounts. Money mutual fund accounts are short-term instruments in stocks and are available through certain investment companies. And these companies aren't and cannot be insured by FDIC, which on the other hand is a special feature of a bank issuing money market savings accounts. Though they both invest in short term financial products of investments, there is no guaranteed return on the mutual fund account.

Here are a few of the top banks offering the best high-yielding money market savings accounts.

Sallie Mae has a high annual percentage yield (APY) of 1.40% and do not require a minimum deposit. Discover Bank has a 1.35% APY and a minimum deposit of $500. Capital One Direct Banking has a minimum deposit requirement of $2,500 and an APY of 1.34%. Ally Bank's money market savings account has a 1.29% APY and does not require a minimum balance deposit. Ever Bank has a 1.26% APY and a minimum deposit of $1,500 on its money market savings account. The Online bank newdominionDIRECT.com offers an approving 1.30% APY but a high minimum deposit of $3,000. The rates mentioned have been verified by Bankrate.com as of July 29, 2010.