MMA alternative?

[frugal saver]

I used to have a Money Market Account (back when banks actually paid interest) that came with a check book for withdrawals. I'd put in money and use it as an emergency account for unexpected vet bills/car repair, etc.

Now I'm using the credit card, then transferring money from online savings to checking account, then paying off the credit card.

Is there an easier way? All of my online savings accounts are with out-of-state banks and don't come with a debit card option. In-state banks for some reason don't pay enough interest to make it worth the bother.

[amastewa93]

The transfer almost seems unnecessary. Why not just keep the money in the checking account to pay the credit card off? Obviously, you will gain interest on a savings account, but usually only if it stays in the bank for an extended period of time.

However, as far as alternatives to MMA...You may want to check out short-term CDs, short-term bonds funds and ETFs are all great alternatives to an MMA account.

[kv968]

Go with Ally. 1%, no overdraft fees (if your checking runs out it will draw from your savings). Rates suck but at least you'll get a couple bucks a month. MMA's are getting around 0.85%. They will send you checks and a debit card. No minimums. I've been with them for about a year. Can't complain.

Just be aware that you can do no more than 6 electronic transfers from the account or 6 checks per statement cycle (1 month) without incurring a fee. However it's unlimited ATM withdrawals.

[feh]

I used to have a Money Market Account (back when banks actually paid interest) that came with a check book for withdrawals. I'd put in money and use it as an emergency account for unexpected vet bills/car repair, etc.

Now I'm using the credit card, then transferring money from online savings to checking account, then paying off the credit card.

Is there an easier way? All of my online savings accounts are with out-of-state banks and don't come with a debit card option. In-state banks for some reason don't pay enough interest to make it worth the bother.

Have the CC company pull the funds for payment from online savings. No reason for the extra transfer to your checking account.

[frugal saver]

Ok, I found it.

A local credit union has a Money Market Account that pays 3% (maximum of $2000)--if you have more in the account, the rate goes down.

That's plenty to sit there for the next emergency, and they allow 3 checks a month, so that will work fine.

I don't know how long the rate will last, but it will work for now.

[MattNY]

I get what you're trying to do but the interest % is almost negligible. Sometimes it's easier just to have all the accounts with 1 bank.

If it helps this is how my wife and I run it:

Checking Account # 1 MONTHLY ACCOUNT
Income and earning go into here
Monthly Expenses go out
Saving for "non monthly expenses" go out

Checking Account # 2 NON-MONTHLY ACCOUNT
Transfers from Monthly account go into here
Expenditures on non-monthly events go out
Manage line items on an Excel spreadsheet-
For example, 1 line item is auto insurance premium so we contribute to it monthly and when the bill comes twice a year we always have cash for it. Another example is car maintenance which we always keep at $500 and replenish it if it dips below. This keeps us disciplined about keeping cash on hand for events that don't occur every month.

Savings Account
Seek to maintain 6 mo of monthly expenses for an emergency
Almost no transactions ever happen here
Good candidate for your higher yield account

Credit Card
Pay all expenses here in order to track spending with a tool like Mint.com
At end of month pay balance for all "monthly" expenses out of monthly checking account #1. Pay balance for all "non monthly" expenses, if any, out of non monthly checking account #2.


This might look a bit more complicated than it is. It works great for us and we spend about 20 minutes at the end of each month on it and we have NEVER FOUGHT about money!

-Matt