March 26, 2024 — Rates Move Upward – Forbes Advisor – Technologist

Current Money Market Rates

Right now, the average money market rate sits at 0.59%, but the best rate today is 5.13%.

Here are today’s money market account rates:

• Average APY: 0.59%
• Highest Rate: 5.13%

Source: Curinos. Data accurate as of March 25, 2024. Rates are based on a $10,000 minimum deposit amount.

What Are Money Market Rates?

Money market rates are the interest rates you earn on your balance in a money market account. Rates for money market accounts are variable, meaning they are subject to change at any time and are calculated as a percentage of your balance. Often, money market accounts have tiered rates with larger balances earning the best rates.

The interest rate for a money market account represents how much money you earn on your balance, and the annual percentage yield (APY) represents how much you earn on your balance plus compound interest over the course of a year. Compound interest is the interest you earn on interest as it’s added back to your account.

How Does a Money Market Account Work?

A money market account, or MMA, is an interest-bearing deposit account you can open at a bank or credit union. These are insured up to $250,000 per depositor by the FDIC at banks, or the NCUA at credit unions. The insurance protects your balance if your bank fails.

As with other savings accounts, your money in an MMA will grow as it earns interest, and you can add or withdraw funds at any time. You may also be able to write checks or use a debit card. However, depending on the bank, you could be limited to six transactions per statement period.

Money market accounts may offer higher interest rates than typical savings accounts. In exchange, they often require higher minimum deposits and balances.

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.