bank rates

Money Market Account Or 6-Month CD?

Smiling woman holding a small, pink piggy bank in her left handIt’s bleak everywhere.

But is it bleak enough to recommend the lowly 6-month CD over a money market account?

Yes, it’s getting that bad.

Since several banks slashed MMA rates last month, there’s one lone bank paying above 1.00% — and that’s only for balances up to $50,000 (this is key).

EverBank (www.everbank.com) has paid the highest rates on nationally available MMAs for more than a year, though its rates have slipped from 1.25% APY to 1.10% APY.

EverBank continues to offer its Yield Pledge Money Market, which guarantees to pay 1.10% APY for the first six months after you’ve opened your account. After that time, the rate drops to the standard MMA rate, which currently stands at 0.61% APY.

So 1.10% APY on an account that’s the equivalent of a 6-month CD because of the guarantee is better than the top nationally available deal on our CD Rates Leaderboard.

Easy decision, right? Not necessarily.

The Jacksonville, Fla., bank pays its best rate on balances to $50,000. Higher portions of the balance earn 0.61% APY.

If you have a bunch of money to deposit short-term, this might not be the best offer.

Let’s compare, using our CD calculator.

In our example, we’ll deposit $100,000 in an EverBank money market account and $100,000 at Doral Bank Direct, which offers the best nationally available 6-month CD at 0.87% APY.

EverBank: After 6 months, you will have earned $275 on the first $50,000 at 1.10% APY and $152 on the second $50,000 at 0.61% APY. That’s a total of $427 in earned interest.

Doral: After 6 months, you will have earned $434 on your $100,000 deposit, slightly more than EverBank pays because of its cap on earning the top rate.

Let’s be clear. Neither of these yields can be considered anything better than pathetic.

But it still beats sticking your cash under your mattress.

The next five money market accounts we’re tracking all pay 0.90% APY, hardly better than the best 6-month CD rate. Consider that before you consider anything other than EverBank or a local deal you may find that pays more.

You can compare these rates to the best money market and savings account rates offered by scores of banks in our database.

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Comments (2)
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2 Existing Comments
  1. derek said:
    on October 15th at 03:27 pm

    I think EverBank offers its promotional rates ONLY TO CUSTOMERS WHO HAVE NEVER BANKED THERE BEFORE, no matter how long ago you opened or closed an account. Since EverBank is mentioned so often in bankaholic, perhaps you should add this restriction in future postings.

    Although I confirmed this by telephone, please let me know if I’m mistaken, and I’ll bank with them again.

  2. Mike Cetera said:
    on October 16th at 12:18 pm

    Derek: We have mentioned in previous posts this is open to first-time MMA holders, but we didn’t on this post. We’ll add that disclaimer again in the future.