In response to our newsletter last week regarding the 3.9% yield available on the Fidelity money market fund, a client noticed that his Capital One money market account was paying only 0.3%. (Note that money market “funds” differ from money market “accounts”… here is more detail: (Money Markets)
In general, the interest rate on money market accounts should go up and down with short-term interest rates, but it’s up to the bank to set the interest rate. Unfortunately, many large institutions have been reluctant to make appropriate adjustments.
Capital One is currently advertising an interest rate of 3.3%. We have recommended Capital One to many clients in the past for use as their emergency fund. Carolyn recently called Capital One and was told that “old accounts” would be capped at a measly 0.3%. If you have a Capital One account, please verify that you are receiving a competitive interest rate. If not, there are several other choices paying attractive rates – you can check them out here: bankrate.com.
Needless to say, Carolyn was not pleased with Capital One. You can read about her experience in this article at CNBC.
