Where to Earn the Most on Cash
Surprise! Boring bank savings accounts are paying more than money-market mutual funds. But you must go online for the best deals.
By Carolyn Bigda

(MONEY Magazine) – What's New

When rates rise, money funds usually lead. Not today. As banks expand online in a bid for more deposits, they are creating Web-only savings and money-market accounts with yields that rival, or beat, those of funds. Better yet, many high-yield savings accounts don't require big balances.

Best Strategies

• Find a high rate. Check out the money-market account deals below or search bankrate.com and fatwallet.com/c/52.

• Protect yourself. If the bank is unfamiliar, look for an FDIC icon on the website to ensure that your money is federally insured.

• Have two accounts. Top savings accounts from HSBCdirect.com and EmigrantDirect.com yield 4%, but you can't write a check to get at your money. To do so, you must transfer funds electronically to your checking account, which can take up to four days.

• Outlook

These savings deals are best for now. But money-market yields move up as interest rates rise, so funds may catch up with banks if the Fed hikes rates again.

SAVINGS NOTES AND SOURCES: CD and money-market account data as of Nov. 15 from 100 Highest Yields ($124 for 52 issues; 800-327-7717). Average tax-exempt and taxable money-market fund yields for the week ended Nov. 15 from Money Fund Report (imoneynet.com); all have a minimum investment of $10,000 or less and assets of $25 million or more. Average bond fund yields for the month ended Oct. 31 from Lipper; all are medium- and high-quality funds without sales loads and with average maturities of three years or less. [1] Manager absorbed all or some operating expenses. CREDIT NOTES AND SOURCES: All rates subject to change. Credit-card rates are for standard cards as of Nov. 15 from Bankrate.com and are variable unless otherwise indicated. Survey does not include Internet-only cards or AmEx Blue. [1] Visa only. [2] Fixed rate. [3] MasterCard only. [4] Platinum and gold cards.