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Current Money Market Rates
Right now, the average money market rate sits at 0.60%, but the best rate today is 5.12%.
Here are today’s money market account rates:
- Average APY: 0.60%
- Highest Rate: 5.12%
Source: Curinos. Data accurate as of May 9, 2024. Rates are based on a $10,000 minimum deposit amount.
What Are Money Market Rates?
Money market rates are interest rates tied to a money market savings account. These rates are variable rather than fixed, so they can fluctuate and change without notice, and they may also be tiered, so higher balances yield more favorable rates. Money market interest earnings are credited as a percentage of your balance.
The rate you earn on your balance is your interest rate, while the money you make on your balance with compound interest over a year is reflected in your annual percentage yield or APY. Compound interest is the interest you earn on the interest you’ve already made.
How Does a Money Market Account Work?
A money market account (MMA) is a type of interest-bearing deposit account offered by banks and credit unions. MMAs at banks are insured by the FDIC, while MMAs at credit unions are insured by the NCUA. In both cases, depositors are covered for up to $250,000 per account type, protecting your money in the event of bank failure. Money market accounts work like other savings accounts in that you deposit money freely and earn interest on your balance. You can take out funds whenever you need to, but you may be restricted to six transactions per statement period.
Money market accounts typically pay higher interest rates than other deposit accounts, including traditional savings accounts. And unlike typical savings accounts, they usually offer debit cards, check-writing capabilities or both, providing convenient access to cash. Money market accounts often have higher deposit and balance requirements than many bank accounts.
How To Open a Money Market Account
To open a money market account, start by researching accounts to choose the option with the best rates for the amount you plan to save. Make sure you can meet opening and ongoing balance requirements to earn interest and avoid fees. In addition to rates and minimums, consider account fees, withdrawal limits and other features to find the best fit.
When you’re ready to open an account, you can submit an application online or at a bank branch. The application will ask for personal information, including your name, address, Social Security number, employment status and income. You’ll also need to provide a government-issued ID. Once your application is approved, you can make your first deposit. Be sure to transfer at least the minimum opening deposit required.
Money Market Account vs. Savings Account
Money market accounts share similarities with both savings and checking accounts. Like savings accounts, a money market account allows you to deposit money at your convenience and earn regular interest on your balance. Both accounts are safe and liquid, with easy access to your cash and insurance on your deposit. Either account can have monthly fees, withdrawal restrictions and balance requirements to earn interest and avoid fees. However, money market accounts typically have higher fees and balance requirements.
Like checking accounts, money market accounts often offer debit cards and checks, making them more convenient than the average savings account. However, money market accounts may limit your transactions, making MMAs less than ideal for regular use.
Is a Money Market Account Worth It?
A money market account is worth it if you’re looking for a safe place to keep some cash while earning interest. These are FDIC- or NCUA-insured accounts that provide convenient options for accessing your money and higher interest rates than many other deposit accounts offer. If you can meet the initial deposit requirements to open an account and maintain balance requirements to earn the best rates, a money market account may make sense for you.
But a money market account may not be worth it if you will end up paying more in fees than you earn in interest or if minimum balance requirements and transaction restrictions cause you unnecessary stress. If you need an account for everyday use, consider an interest checking account. For lower minimums, you might have better luck with a savings account.