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Things to Consider

Why the Highest Money Market Rates May Not Be Enough

Money market funds (or MMFs), offered by brokerages, differ from money market accounts (or MMAs), so simply shopping for the highest money market rate isn't necessarily the best way to make smart financial decisions.

Money market funds
As a bank, Ally Bank doesn't offer money market funds, but we can give you some basic information about how they work so that you can make informed choices about your money. MMFs come with a variety of terms, so it's important to look for more than just the highest money market rate to ensure you get the one that fits your needs. Some funds invest only in U.S. Treasury notes, others buy a range of U.S. government and agency notes; some invest in state and municipal securities; still others invest more aggressively in short-term commercial credit notes.

It's important to note that the returns from some funds are exempt from federal taxes while some are exempt from state and local taxes. Some tax-exempt funds invest only in municipal or state securities from a particular state and are only open to the residents of that particular state. Money market funds typically require a minimum investment, and the "highest money market rate" may not be as great as you think because, like all mutual funds, the companies managing them charge you for that service. The cost of owning a mutual fund is called the "expense ratio." This ratio represents the percentage of the fund's assets that go toward the expense of running the fund.

Money market accounts
A money market account, or MMA, is just what it sounds like, a type of bank account. Deposits in money market accounts at FDIC-member banks such as Ally Bank are federally insured up to the maximum allowed by law. By contrast, mutual funds don't have FDIC insurance. You generally can access the funds in a money market account at any time, subject to federal limits on transactions.

If you're looking for an alternative to a money market fund or you’re looking for a money market account to diversify your overall financial portfolio, consider the Ally Bank Money Market Account. An Ally Bank Money Market Account requires no minimum balance to open and no monthly maintenance fees. You get free standard checks and you can use any Allpoint no-fee ATM—plus receive up to $10 reimbursement for fees charged at other ATMs nationwide each statement cycle.

Learn more at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559).