Capital One has a series of savings accounts that they call "money market" accounts - not to be confused with money market mutual funds. They have two accounts, High Yield Money Market and Money Market, both currently at 5.00% APY (4.88% per annum). These are both categorized as "direct banking". Essentially, these are the same as "online savings accounts", although they also group their Certificates of Deposit (CDs) in there as well, which I'm ignoring in this review.
While both accounts (currently) pay the same %APY and are insured by the FDIC (up to $100,000 per individual account), there are different deposit and balance criteria:
High Yield Money Market:
This
account has a 5.00%APY and interest is calculated on daily balance.
There is a $1 initial deposit requirement, but no minimum balance is
necessary. You can transfer money to it from an existing checking
account. You're allowed 6 withdrawals per month. There are no service
fees.
Money Market:
Same interest info as above, but
has a requirement of a $100 initial deposit and a $100 minimum balance.
You can write checks on the account and access money from ATMs. Three
of the 6 monthly withdrawals can be "checks written to third parties".
You cannot transfer money online. The rate chart for this investment
vehicle currently shows the same interest rate for several different
balance ranges. This could mean that in the future, certain balances
could earn higher rates. There's an arm-long list of service fees, but
besides the ATM/ checking fees, most are not a concern if you are
watching your account carefully online.
Learn more at their website: Capital One Direct Banking
In short, the second account is good for those people who may need to access their money on occasion. If you're going to do this a lot - especially on a regular monthly basis - you might be better off going with the first account and leaving the extra money you'll be needing in a separate checking account. You won't earn much interest, but you also won't have to pay unnecessary fees.
Both account types can be managed online 24/7. I was unable to find any indication of whether a linked checking account must be held at Capital One or whether you are allowed outside accounts.
Compare the Capital One terms and conditions with online savings accounts for Ing Direct, Emigrant Direct, or HSBC Direct. At the time of this writing:
- Emigrant Direct has no minimum balance requirement and no setup or monthly fees. You can link up to two accounts to their online savings account.
- Ing Direct similarly has no fees and allows up to three other accounts to be linked to their online savings account.
- HSBC Direct has no fees, service charges, or minimum balance requirements. You can only link one bank account to the online savings account, with transfer preference given to an existing HSBC checking account. That is, transfers between their online savings account and accounts at other banks may take longer.
These three are amongst the most flexibile online savings account offerings, and have the least string. Note that their terms and interest rates may change by the time you read this.
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