Comparing savings account and money market rates

| MoneyRates.com Senior Financial Analyst, CFA

When you shop for a new savings or money market account, you're likely to encounter dozens of accounts and a lot of information. Getting the most for your money depends on whether you use that information to your advantage.

MoneyRates.com highlights dozens of savings and money market rates and updates those numbers regularly. This can make finding competitive rates much easier. But to effectively compare interest rates, you have to be sure that you're comparing apples to apples.

In other words, simply seeking the highest annual percentage rate (APR) won't necessarily lead you to the best deal if other factors counteract that high interest rate. Here are some key things you should consider when you're comparing saving and money market rates.

1. FDIC insurance

The Federal Deposit Insurance Corporation (FDIC) insures accounts at participating banks up to a total of $250,000 per depositor, per bank. You can visit their website at www.fdic.gov to make sure the bank you have in mind is insured by the FDIC. All of the banks featured on MoneyRates.com are FDIC insured.

If you have more than $250,000 to deposit, it is possible to have more than that amount insured if some of the money is in a qualified retirement plan (which is effectively considered as coming from a different depositor than your personal account) or if it is in a joint account with your spouse (you are each entitled to $250,000 in coverage, for a total of $500,000 in a joint account). Otherwise, you should spread your money among different banks in order to keep amounts in excess of $250,000 insured.

2. Normal interest rates vs. teaser rates

Banks sometimes offer what they call a "teaser rate." This is a special high rate offered for a short time when you start a new account. But in the greater scheme of things, getting a high rate for a month or two is less important than the rate you will earn over the long haul. So when you are comparing savings and money market rates, make sure you focus on the regular interest rate offered by the account -- not a temporary teaser rate.

3. Consistency

One of the challenges involved in comparing savings and money market rates is that these accounts are allowed to change their interest rates at any time, so the rate you sign up for might not be the rate you get in the months ahead.

However, certain banks tend to regularly offer higher rates than their competition. MoneyRates.com produces a quarterly America's Best Rates feature that spotlights the banks that have offered the best rates over the most recent calendar quarter, based on an average of rates offered throughout the quarter. As a result, the banks you see highlighted on this list have offered high rates for more than just a short period of time.

4. The right account size

Many banks offer different rates at different account sizes, with larger accounts often qualifying for higher rates. Therefore, when you are making your final decision, make sure you are looking at rates that apply to the account size you have in mind.

Research like this requires some effort, but doing the necessary homework can help you find an account that pays you more month after month.

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