Brilliant Bank Money Market: How It Works and What to Know
Understand how the Brilliant Bank Money Market account works, including key factors like interest rates, access to funds, fees, and coverage protections.
Brilliant Bank’s money market account combines features of savings and checking accounts, offering both interest earnings and liquidity. Understanding its structure can help determine if it suits your financial goals.
Opening and Eligibility
Brilliant Bank requires a minimum opening deposit between $1,000 and $2,500, a higher threshold than standard savings accounts. This ensures account holders maintain a balance that maximizes the account’s benefits.
Eligibility is limited to U.S. citizens and permanent residents with a valid Social Security or taxpayer identification number. Applicants must be at least 18 years old, though custodial accounts may be available for minors under a guardian’s supervision. The application process requires identification, proof of address, and possibly employment or income details.
Brilliant Bank may conduct a soft credit check through ChexSystems or a similar service to review an applicant’s banking history. Negative marks, such as unpaid overdrafts, can impact approval, while a strong banking record improves acceptance chances.
Interest Rate Factors
Brilliant Bank’s money market account interest rate is influenced by Federal Reserve policy. Rate hikes typically lead to higher yields, while rate cuts reduce returns.
Competition also affects rates. Online banks, with lower overhead than traditional institutions, often offer better returns. If Brilliant Bank operates primarily online, its rates may be more competitive.
The bank uses a tiered interest rate structure, where higher balances earn better rates. For example, balances under $10,000 might earn 3.00% APY, while those above $50,000 could receive 4.25% APY. Some banks offer promotional rates for new customers, which later revert to standard rates.
Access to Funds
Brilliant Bank’s money market account allows withdrawals and transfers, though some restrictions apply. Unlike traditional savings accounts, which often limited withdrawals to six per month under federal regulations, money market accounts typically allow more frequent access. Account holders can use checks, debit cards, or electronic transfers, though some banks impose transaction limits or fees.
A linked debit card enables ATM withdrawals, depending on Brilliant Bank’s network partnerships. Some banks reimburse out-of-network ATM fees, while others charge for withdrawals beyond a set number. If the bank is part of a network like Allpoint or MoneyPass, customers may access thousands of fee-free ATMs. Daily withdrawal limits, typically $500 to $1,000, may apply.
Electronic transfers, such as ACH and wire transfers, offer additional ways to move funds. ACH transfers are usually free but take one to three business days. Wire transfers provide same-day availability but often come with fees ranging from $15 to $30. Some banks offer instant transfers between linked accounts for quicker access.
Tax Treatment
Interest earned on a Brilliant Bank money market account is taxable and must be reported to the IRS. The bank issues a Form 1099-INT if total interest exceeds $10 in a tax year. Even amounts below this are subject to taxation. Interest is categorized as ordinary income and taxed at the account holder’s federal marginal rate, which ranges from 10% to 37%. State income tax may also apply unless the account holder resides in a state without such a tax.
Unlike tax-advantaged accounts like IRAs, money market accounts do not offer tax deferral or exemptions. Interest is taxed in the year it is earned, reducing real returns for those in higher tax brackets. Some investors explore tax-exempt alternatives, such as municipal bond funds, which generate interest exempt from federal taxes and, in some cases, state taxes.
Fees and Charges
Brilliant Bank’s money market account may have fees that impact earnings. Monthly maintenance fees are common but are often waived if a minimum balance is maintained. A fee of $10 to $15 may apply if the balance falls below a set threshold, such as $5,000.
Excessive transaction fees may also apply if the bank limits the number of withdrawals or transfers per statement cycle. Exceeding the limit can result in penalties of $5 to $15 per transaction.
Other potential fees include overdraft charges, wire transfer costs, and ATM fees for out-of-network withdrawals. Overdraft fees can exceed $30 unless the account is linked to another for protection. Wire transfers, particularly international ones, may cost $15 to $50. Non-affiliated ATM withdrawals can incur fees of $2 to $5. Reviewing the fee schedule before opening an account helps avoid unexpected costs.
Coverage Protections
Brilliant Bank’s money market account is FDIC-insured, protecting deposits up to $250,000 per depositor, per ownership category. If an individual holds multiple accounts at the same bank, such as a checking and money market account, the total balance is insured up to the limit. Joint accounts receive separate coverage, effectively doubling protection to $500,000 for two account holders.
For those with balances exceeding FDIC limits, spreading deposits across multiple banks or ownership categories can extend coverage. Some institutions participate in deposit sweep programs, distributing funds across partner banks to increase insured limits. Additionally, brokerage firms offer money market funds, which differ from bank money market accounts and are not FDIC-insured but may be protected under the Securities Investor Protection Corporation (SIPC) in case of brokerage insolvency.