Borrowers may cringe at the thought of rising interest rates. But for savers, interest rate hikes offer relief after years of earning rock-bottom yields.
On Tuesday, CIT Bank rolled out a new money market account (MMA) that pays 1.75 percent APY. Currently, that’s the highest MMA rate you can find in all 50 states. Two other institutions—All America Bank and its online division Redneck Bank—offer the same rate.
CIT Bank’s new account pays nearly 12 times more than the national average MMA rate (0.15 percent APY, according to Bankrate’s latest national survey). See how it compares to other high-yield MMAs. Then do the math and find out how much interest you could earn in one year.
How it stacks up
All America and Redneck Bank’s Mega Money Market account beats CIT Bank’s offer by requiring a lower minimum opening deposit ($50). To qualify for CIT Bank’s rate, you’ll need to have at least $100 ready to sock away.
But CIT Bank’s deal is better if you have a large amount of savings that you need to keep in a liquid account. There’s no balance cap. If you want the top rate, the most you can save in All America and Redneck Bank’s MMA is $50,000.
Several banks offer MMAs that pay 1.7 percent APY, including BankPurely, which recently added an MMA to its product line. But they all come with higher minimum deposits.
|All America Bank||1.75%||$50|
|Beal Bank USA||1.55%||$25,000|
|Northern Bank Direct||1.51%||$5,000|
If the yield is the most important factor you consider before opening a new account—and you still want your deposits to be federally insured—you may prefer to open a savings account or CD instead. Today’s top savings account yield (1.85 percent APY) is one-tenth of a percentage point higher than what CIT Bank is offering. And the best 12-month CD pays 2.11 percent APY.
The rate and the low minimum deposit tied to CIT Bank’s new MMA make it worth considering. There are no monthly maintenance fees and interest compounds daily, allowing your savings to grow as quickly as possible. And a free online bill pay service will be available later in the spring.
“Customers can save and also pay for large purchases or emergency expenses such as car repairs, medical expenses or home maintenance costs,” says Ravi Kumar, head of internet banking for CIT Bank. “CIT’s money market account lets individuals grow their savings while making sure their money isn’t tied up when it’s needed the most.”
Like Venmo and Zelle, you can use People Pay to send money for free to anyone with a U.S. bank account and either a cell phone number or an email address. You can transfer money directly from the MMA to another account. You can also send funds through PayPal.
With People Pay, it may take up to three business days for someone to receive the money you’ve sent (depending on the transaction). The most you can transfer per transaction with People Pay is $2,000, with a $4,000 daily limit.
Under federal law, you’re prohibited from making more than six transfers or withdrawals from a money market or savings account per monthly statement cycle. If you exceed that threshold, you’ll typically pay a fee. At CIT Bank, it’s $10 for each transaction above the limit and there’s a monthly cap of $50.
If you need to move money in and out of an account on a regular basis, you’re better off sticking with a standard checking account.
Check writing capabilities aren’t available with CIT Bank’s new MMA either. But you can access your funds through People Pay, electronic transfer or wire transfer. You can also request a check through the mail if necessary.
Opening the money market account
As with other accounts at CIT Bank, the application for the money market account can only be completed online.
When you’re ready to apply, be prepared to enter basic information, including your Social Security number, address, email address and phone number.
Once your money market account is open, you’ll be able to access it through the bank’s website or through its mobile app.
About CIT Bank
CIT Bank is an internet bank with no physical branches. It’s based in Pasadena, California and is a subsidiary of CIT, a financial services company established in 1908. In Bankrate’s latest review of its financial health, the bank earned five out of five stars.