Bank Money Markets Accounts (MMA) vs Mutual Fund Money Market Funds (MMF)

Today’s relatively flat yield curve (short term rates just slightly lower than long term rates) creates an environment where bank money market accounts or mutual fund money market funds are an attractive investment for the safety-oriented investor. Currently the national average on a bank money market is 4.14% compared to the average on a mutual fund money market fund of 4.72%. This does not tell the whole story though as the top 5 yielding FDIC-insured bank money markets are yielding signicantly higher than the top 5 yielding retail mutual fund money markets as listed below:

Bank Money Market accounts - FDIC insured up to $100,000

everbank.com 6.01%, minimum $1
Ascencia Bank 5.40%, minimum $100,000
AmTrust Direct 5.36%, minimum $1,000
Bank of Wausau 5.35%, minimum $25,000
Nexity Bank 5.35%, minimum $50,000

Mutual Fund Money Market Funds - Prime Retail

TIAA-CREF MMF 5.19%, minimum $2,500
Vanguard Prime MMF 5.14%, minimim $3,000
Harbor MMF 5.06%, minimum $1,000
PayPal MMF 5.03%, minimum $1
GE MMF 5.03%, minimum $500

Bank money market accounts are subject to change at anytime, but most of the leading banks will keep their rate competitive. Mutual fund money market funds are subject to market conditions and the yield is effected by the value of underlying securities. Investors can easily switch out of either bank money market accounts or mutual fund money market funds because both offer limited check-writing privileges.